2O17. second quarter

2O17 second quarter

Intertape Polymer Group Inc. Management s Discussion and Analysis Consolidated Quarterly Statements of Earnings Three month periods ended (In thousands of US dollars, except per share amounts) (Unaudited) March 31, December 31, September 30, 2017 2017 2016 2016 $ $ $ $ Revenue 210,158 207,120 209,909 206,559 Cost of sales 162,783 157,980 156,174 161,705 Gross profit 47,375 49,140 53,735 44,854 Gross margin 22.5% 23.7% 25.6% 21.7% Selling, general and administrative expenses 28,717 25,974 25,576 27,338 Research expenses 2,643 2,978 3,227 2,287 31,360 28,952 28,803 29,625 Operating profit before manufacturing facility closures, restructuring and other related charges (recoveries) 16,015 20,188 24,932 15,229 Manufacturing facility closures, restructuring and other related charges (recoveries) 410 267 (7,744) 6,329 Operating profit 15,605 19,921 32,676 8,900 Finance costs Interest 1,283 1,148 1,236 1,158 Other expense, net 274 428 15 270 1,557 1,576 1,251 1,428 Earnings before income tax expense 14,048 18,345 31,425 7,472 Income tax expense Current 2,753 2,693 3,454 30 Deferred 1,222 2,219 6,272 1,192 3,975 4,912 9,726 1,222 Net earnings 10,073 13,433 21,699 6,250 Net earnings (loss) attributable to: Company shareholders ("IPG Net Earnings") 10,199 13,462 21,682 6,250 Non-controlling interests (126) (29) 17-10,073 13,433 21,699 6,250 IPG Net Earnings per share Basic 0.17 0.23 0.37 0.11 Diluted 0.17 0.22 0.36 0.10 Weighted average number of common shares outstanding Basic 59,153,920 59,134,017 58,899,366 58,696,647 Diluted 59,557,443 60,202,147 60,746,886 60,870,914 1

Consolidated Quarterly Statements of Earnings Three month periods ended (In thousands of US dollars, except per share amounts) (Unaudited) March 31, December 31, September 30, 2016 2016 2015 2015 $ $ $ $ Revenue 201,517 190,816 195,677 200,635 Cost of sales 149,715 149,720 149,885 157,838 Gross profit 51,802 41,096 45,792 42,797 Gross margin 25.7% 21.5% 23.4% 21.3% Selling, general and administrative expenses 26,282 23,384 25,765 17,927 Research expenses 2,734 2,542 2,753 2,499 29,016 25,926 28,518 20,426 Operating profit before manufacturing facility closures, restructuring and other related charges 22,786 15,170 17,274 22,371 Manufacturing facility closures, restructuring and other related charges 2,090 1,733 2,683 181 Operating profit 20,696 13,437 14,591 22,190 Finance costs (income) Interest 1,022 982 1,036 919 Other expense (income), net 411 (91) 504 (651) 1,433 891 1,540 268 Earnings before income tax expense (benefit) 19,263 12,546 13,051 21,922 Income tax expense (benefit) Current 3,197 2,076 2,592 3,281 Deferred 2,408 940 (7,033) 2,987 5,605 3,016 (4,441) 6,268 Net earnings 13,658 9,530 17,492 15,654 IPG Net Earnings 13,658 9,530 17,492 15,654 Non-controlling interests - - - - 13,658 9,530 17,492 15,654 IPG Net Earnings per share Basic 0.23 0.16 0.30 0.26 Diluted 0.22 0.16 0.29 0.26 Weighted average number of common shares outstanding Basic 58,657,691 58,655,667 58,802,897 59,785,871 Diluted 60,834,393 60,035,667 60,316,201 60,879,777 2

This Management s Discussion and Analysis ( MD&A ) is intended to provide the reader with a better understanding of the business, strategy and performance of Intertape Polymer Group Inc. (the Company ), as well as how it manages certain risks and capital resources. This MD&A, which has been prepared as of August 10, 2017, should be read in conjunction with the Company s unaudited interim condensed consolidated financial statements and notes thereto as of and for the three and six months ended 2017 and 2016 ( Financial Statements ). It should also be read together with the text below on forward-looking statements in the section entitled Forward-Looking Statements. For the purposes of preparing this MD&A, the Company considers the materiality of information. Information is considered material if the Company believes at the time of preparing this MD&A: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the common shares of the Company; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; and/or (iii) it would significantly alter the total mix of information available to investors. The Company evaluates materiality with reference to all relevant circumstances, including potential market sensitivity. Except where otherwise indicated, all financial information presented in this MD&A, including tabular amounts, is prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ( IFRS or GAAP ) and is expressed in US dollars. Variance, ratio and percentage changes in this MD&A are based on unrounded numbers and therefore can give rise to rounding differences. Overview The Company reported a 4.3% increase in revenue for the second quarter of 2017 compared to the second quarter of 2016 and a 6.4% increase in revenue for the first six months of 2017 compared to the same period in 2016. The increase in revenue in both periods was primarily due to an increase in average selling price, including the impact of product mix, additional revenue from the Powerband Acquisition (1), and the non-recurrence of the South Carolina Commissioning Revenue Reduction (2), partially offset by a decrease in sales volume in certain tape products. Gross margin decreased to 22.5% in the second quarter of 2017 compared to 25.7% in the second quarter of 2016 primarily due to the non-recurrence of South Carolina Flood Insurance Proceeds (2) of $4.5 million recorded in the second quarter of 2016 and stronger manufacturing capacity utilization in the second quarter of 2016. These unfavourable items were partially offset by the favourable impact of the Company s manufacturing cost reduction programs. Gross margin decreased to 23.1% in the first six months of 2017 compared to 23.7% for the same period in 2016 primarily due to stronger manufacturing capacity utilization in the first six months of 2016, an unfavourable product mix variance, and a reduction in the South Carolina Flood Insurance Proceeds from $4.5 million recorded in the first six months of 2016 to $2.1 million recorded in the first six months of 2017. These unfavourable items were partially offset by the favourable impact of the Company s manufacturing cost reduction programs. Net earnings attributable to Company shareholders ( IPG Net Earnings ) for the second quarter of 2017 decreased to $10.2 million ($0.17 basic and diluted earnings per share) from $13.7 million for the second quarter of 2016 ($0.23 basic earnings per share and $0.22 diluted earnings per share). The decrease was primarily due to a decrease in gross profit and an increase in selling, general and administrative expenses ( SG&A ) mainly related to (i) share-based compensation driven by the change in fair value of cashsettled awards, (ii) an increase in advisory fees and other costs associated with mergers and acquisitions ( M&A ) activity, and (iii) additional SG&A from the Powerband Acquisition, partially offset by a decrease in variable compensation resulting from lower than expected operating results. These unfavourable impacts were partially offset by a decrease in manufacturing facility closures, restructuring and other related charges mainly related to the South Carolina Flood and a decrease in income tax expense. IPG Net Earnings for the first six months of 2017 increased to $23.7 million ($0.40 basic and diluted earnings per share) from $23.2 million for the same period in 2016 ($0.40 basic earnings per share and 3

$0.38 diluted earnings per share). The increase was primarily due to an increase in gross profit and a decrease in manufacturing facility closures, restructuring and other related charges mainly related to the South Carolina Flood, partially offset by an increase in SG&A. The SG&A increase was primarily due to (i) additional SG&A from the Powerband Acquisition, (ii) an increase in advisory fees and other costs associated with M&A activity, and (iii) an increase in employee related costs primarily to support growth initiatives in the business. Adjusted EBITDA (a non-gaap financial measure as defined and reconciled later in this document) for the second quarter of 2017 decreased to $28.5 million from $33.0 million for the second quarter of 2016. The decrease in adjusted EBITDA was primarily due to a decrease in gross profit mainly related to the non-recurrence of $4.5 million of South Carolina Flood Insurance Proceeds recorded in the second quarter of 2016. Included in adjusted EBITDA for the second quarter of 2017 and 2016 are advisory fees and other costs associated with M&A activity totalling $2.3 million and $0.8 million, respectively. Adjusted EBITDA for the first six months of 2017 increased to $58.1 million from $57.0 million for the same period in 2016. The increase in adjusted EBITDA was primarily due to an increase in gross profit, partially offset by an increase in SG&A. Included in adjusted EBITDA for the first six months of 2017 and 2016 are advisory fees and other costs associated with M&A activity totalling $2.9 million and $0.9 million, respectively. On June 9, 2017, the Company amended its $300.0 million revolving credit facility with a syndicate of financial institutions ( Revolving Credit Facility ) to increase its borrowing limit by $150.0 million, bringing the Revolving Credit Facility s credit limit to $450.0 million. The amended credit agreement continues to include an incremental accordion feature of $150.0 million, enabling the Company to further increase the credit limit of the Revolving Credit Facility if needed, subject to the credit agreement's existing terms and lender approval. As of 2017, the Company had drawn a total of $281.5 million against the Revolving Credit Facility. On July 1, 2017, the Company acquired substantially all of the assets of Canadian Technical Tape Ltd. (doing business as Cantech ), a privately-owned North American supplier of industrial and specialty tapes based in Montreal, for an aggregate purchase price of approximately $67 million, net of cash acquired and subject to a post-closing working capital adjustment ( Cantech Acquisition ). Cantech unaudited revenues for the twelve months ended March 31, 2017 are estimated at $61 million. The purchase price was financed with funds available under the Revolving Credit Facility. The Cantech Acquisition is expected to further enhance and extend the Company s product offering, and provide additional distribution channels for the Company s products in Canada, the US, and Europe. On June 23, 2017, as one of the initial steps in the establishment of the partnership in Capstone Polyweave Private Limited (doing business as Capstone ), the Company purchased substantially all of the issued and outstanding shares of Capstone, a newly-formed enterprise in India ( Capstone Partnership ). The principal purpose of the Capstone Partnership will be to provide the Company with a globally-competitive supply of certain woven products in order to better service and grow the Company s woven products business. The Company has agreed to maintain a minimum of a 55% interest in Capstone for total cash consideration of approximately $13 million to be provided in several tranches over a period of approximately six to twelve months. The majority of the Company s total cash consideration is intended to be used by Capstone to partially finance the construction of a greenfield manufacturing facility which is planned to begin in 2017. As part of the Powerband Acquisition in 2016, the Company entered into various option agreements with the minority shareholders for the transfer of Powerband shares under certain limited circumstances. On July 4, 2017, the Company and the minority shareholders of Powerband executed a binding term sheet that confirmed that the Company s call option on all of the shares owned by the minority shareholders had been triggered and substantially reaffirmed the exit terms of the shareholders agreement executed between the parties on September 2, 2016. As of August 10, 2017, no shares have been purchased by the Company under this agreement as the parties continue to work through the exit provisions stipulated in the term sheet. In order to prepare for the upcoming exit by the minority shareholders, who were also 4

operating the business, the Company has since established a local senior management team to succeed the minority shareholders following the completion of this transaction. The Powerband Investment Project (1) is currently proceeding as planned, however, in light of this transition, the Company may reevaluate the scope and timeline for this project. On August 10, 2017, the Board of Directors declared a quarterly cash dividend of $0.14 per common share payable on September 29, 2017 to shareholders of record at the close of business on September 15, 2017. (1) Powerband Acquisition refers to the acquisition by the Company of 74% of Powerband Industries Private Limited (doing business as Powerband ) on September 16, 2016. Powerband Investment Project refers to plans to expand capacity by investing in the construction of a greenfield manufacturing facility in India. (2) South Carolina Flood refers to significant rainfall and subsequent severe flooding on October 4, 2015 that resulted in considerable damage to and the permanent closure of the Columbia, South Carolina manufacturing facility eight to nine months in advance of the planned shut down. South Carolina Flood Insurance Proceeds refers to insurance claim settlement proceeds totalling $29.5 million, net of a $0.5 million deductible, covering most of the claimed losses associated with the South Carolina Flood. The Company recorded proceeds as a benefit in manufacturing facility closures, restructuring and other related charges totalling $5.0 million, $0.5 million and $9.3 million in the fourth quarter of 2015, second and fourth quarters of 2016, respectively, and as a benefit in cost of sales totalling $4.5 million, $8.1 million, and $2.1 million in the second and fourth quarters of 2016 and the first quarter of 2017, respectively. South Carolina Commissioning Revenue Reduction refers to the sales attributed to the commissioning efforts of the production lines that were accounted for as a reduction of revenue and a corresponding reduction of the cost of the South Carolina Project. South Carolina Project refers to the previously announced relocation and modernization of the Company s Columbia, South Carolina manufacturing operation. This project primarily involved moving the Company s duct tape and masking tape production to a new state-of-the-art facility in Blythewood, South Carolina as well as moving flatback tape production to the Company s existing facility in Marysville, Michigan. Outlook The Company has revised its expectations for fiscal year 2017 as stated below. The revision is primarily due to a lower contribution from Powerband driven by higher raw material costs resulting from a supply interruption and a difficult competitive environment that the Company believes is driven mainly by one key competitor in the industry. Both factors have persisted longer than initially anticipated. The Company expects Powerband s raw material costs to come down as supply capacity is restored, but it is uncertain as to how long this unfavourable impact will continue. Lastly, the revision in expectations is also due to slower progress on the commercialization of certain masking tape and stencil products produced in the Blythewood, South Carolina manufacturing facility. Based on these revised assumptions, and adjusted for the Cantech Acquisition and Capstone Partnership, net of integration costs, the Company now expects the following: As previously stated As revised Gross margin 23% to 24% 22.5% to 23% Adjusted EBITDA $127 to $137 million $120 to $127 million Manufacturing cost reductions $10 to $12 million Upper end of previously stated range Total capital expenditures $75 to $85 million No change Effective tax rate (1) 25% to 30% No change Cash taxes paid (1) ~ 50% of income tax expense No change (1) Excluding the potential impact of any significant tax reform legislation and changes in the mix of earnings between jurisdictions. Additionally, the Company expects revenue, gross margin and adjusted EBITDA in the third quarter of 2017 to be greater than in the third quarter of 2016. 5

Capstone Partnership As discussed above, the principal purpose of the Capstone Partnership will be to provide the Company with a globally-competitive supply of certain woven products in order to better service and grow the Company s woven products business. The Company s investment in Capstone is intended to reinforce its strategic position in woven products through vertical integration. The Company expects to achieve attractive synergies both in terms of higher profitability on the Company s current woven products sales volume as well as additional revenue opportunities as a result of an improved competitive position in the woven products market. The Company will be partnering with the minority shareholders of Capstone, who are also the shareholders and operators of Airtrax Polymers Private Limited (doing business as Airtrax ). Airtrax manufactures and sells woven products that are used in various applications, including in the building and construction industry. The Company has agreed to maintain a minimum of a 55% interest in Capstone for total cash consideration to be provided of approximately $13 million, which will be financed with funds available under the Revolving Credit Facility. The shareholders of Airtrax have agreed to arrange a contribution in kind to Capstone of the net assets attributed to Airtrax s existing woven product manufacturing operations, which are estimated to have a value of approximately $12 million. The Company will make payments in several tranches over a period of approximately six to twelve months from June 23, 2017, with the Airtrax net asset contribution to be made at the end of that period. Airtrax s unaudited revenues for the twelve months ended March 31, 2017 were approximately $11 million. On June 23, 2017, as one of the initial steps in the establishment of the Capstone Partnership, the Company purchased substantially all of the issued and outstanding shares of Capstone for cash consideration of $5.1 million funded primarily from the Revolving Credit Facility. On August 8, 2017, the Company purchased additional shares of Capstone for a purchase price of $5.1 million funded primarily from the Revolving Credit Facility. The majority of the Company s cash consideration of approximately $13 million is intended to be used by Capstone to partially finance the construction of a greenfield manufacturing facility which is expected to cost approximately $30 million. The remaining balance is expected to be financed utilizing debt. The purpose of the greenfield manufacturing facility will be to create new capacity in Capstone in order to produce woven products primarily for the Company s global distribution. The construction of the greenfield manufacturing facility is planned to begin in 2017 with commercial operations expected to commence in the first half of 2019. The Company expects an after-tax internal rate of return in excess of the Company s after-tax hurdle rate of 15% on this greenfield project. Results of Operations Revenue Revenue for the second quarter of 2017 totalled $210.2 million, an $8.6 million or 4.3% increase from $201.5 million for the second quarter of 2016 primarily due to: An increase in average selling price, including the impact of product mix, of approximately 3.7% which had a favourable impact of approximately $7.4 million primarily due to a favourable product mix in the woven and film product categories; Additional revenue of $5.3 million from the Powerband Acquisition; and The non-recurrence of the South Carolina Commissioning Revenue Reduction of $2.1 million in the second quarter of 2016; Partially offset by: A decrease in sales volume of approximately 3.1% or $6.2 million mainly related to certain tape products. The decrease was driven by masking tape products commercialized in the Blythewood, South Carolina manufacturing facility and sold in the second quarter of 2016, of which most of those sales were subsequently returned due to quality issues in the third quarter of 2016. 6

Revenue for the second quarter of 2017 totalled $210.2 million, a $3.0 million or 1.5% increase from $207.1 million for the first quarter of 2017 primarily due to: An increase in average selling price, including the impact of product mix, of approximately 1.4% which had a favourable impact of approximately $2.9 million primarily due to a favourable product mix in the film product category; and An increase in sales volume of approximately 0.9% or $1.9 million primarily due to an increase in demand for certain tape products that the Company believes was mainly due to seasonality; Partially offset by: A reduced revenue contribution of $1.8 million from Powerband. Revenue for the first six months of 2017 totalled $417.3 million, a $24.9 million or 6.4% increase from $392.3 million for the same period of 2016 primarily due to: An increase in average selling price, including the impact of product mix, of approximately 3.6% which had a favourable impact of approximately $14.0 million primarily due to a favourable product mix in the woven and film product categories; Additional revenue of $12.4 million from the Powerband Acquisition; and The non-recurrence of the South Carolina Commissioning Revenue Reduction of $6.3 million in the first six months of 2016; Partially offset by: A decrease in sales volume of approximately 2.0% or $7.8 million mainly related to certain tape products. The decrease was driven by masking tape products commercialized in the Blythewood, South Carolina manufacturing facility and sold in the first six months of 2016, of which most of those sales were subsequently returned due to quality issues in the third quarter of 2016. Gross Profit and Gross Margin Gross profit totalled $47.4 million for the second quarter of 2017, a $4.4 million or 8.5% decrease from $51.8 million for the second quarter of 2016. Gross margin was 22.5% in the second quarter of 2017 and 25.7% in the second quarter of 2016. Gross profit and gross margin decreased primarily due to the non-recurrence of South Carolina Flood Insurance Proceeds of $4.5 million recorded in the second quarter of 2016 and stronger manufacturing capacity utilization in the second quarter of 2016. These unfavourable items were partially offset by the favourable impact of the Company s manufacturing cost reduction programs. Gross profit totalled $47.4 million for the second quarter of 2017, a $1.8 million or 3.6% decrease from $49.1 million for the first quarter of 2017. Gross margin was 22.5% in the second quarter of 2017 and 23.7% in the first quarter of 2017. Gross profit decreased primarily due to the non-recurrence of South Carolina Flood Insurance Proceeds of $2.1 million recorded in the first quarter of 2017, partially offset by a favourable product mix variance. Gross margin decreased primarily due to the non-recurrence of South Carolina Flood Insurance Proceeds of $2.1 million recorded in the first quarter of 2017 and a decrease in the spread between selling prices and raw material costs. These unfavourable items were partially offset by a favourable product mix variance. Gross profit totalled $96.5 million for the first six months of 2017, a $3.6 million or 3.9% increase from $92.9 million for the same period in 2016. Gross margin was 23.1% in the first six months of 2017 and 23.7% for the same period in 2016. Gross profit increased primarily due to the favourable impact of the Company s manufacturing cost reduction programs and the non-recurrence of certain unfavourable impacts of the South Carolina Flood. These favourable items were partially offset by (i) a reduction in the South Carolina Flood Insurance Proceeds from $4.5 million recorded in the first six months of 2016 to $2.1 million recorded in the first six months of 2017 and (ii) stronger manufacturing capacity utilization in the first six months of 2016. 7

Gross margin decreased primarily due to stronger manufacturing capacity utilization in the first six months of 2016, an unfavourable product mix variance, and a reduction in the South Carolina Flood Insurance Proceeds from $4.5 million recorded in the first six months of 2016 to $2.1 million recorded in the first six months of 2017. These unfavourable items were partially offset by the favourable impact of the Company s manufacturing cost reduction programs. Selling, General and Administrative Expenses SG&A for the second quarter of 2017 totalled $28.7 million, a $2.4 million or 9.3% increase from $26.3 million for the second quarter of 2016. The increase was primarily due to (i) share-based compensation driven by the change in fair value of cash-settled awards, (ii) an increase in advisory fees and other costs associated with M&A activity and (iii) additional SG&A from the Powerband Acquisition, partially offset by a decrease in variable compensation resulting from lower than expected operating results. SG&A for the second quarter of 2017 increased $2.7 million or 10.6% from $26.0 million in the first quarter of 2017. The increase was primarily due to an increase in share-based compensation driven by the change in fair value of cash-settled awards as well as advisory fees and other costs associated with M&A activity. For the first and second quarters of 2017 and the second quarter of 2016, advisory fees and other costs associated with M&A activity totalled $0.5 million, $2.3 million and $0.8 million, respectively. SG&A for the first six months of 2017 totalled $54.7 million, a $5.0 million or 10.1% increase from $49.7 million for the same period in 2016. The increase was primarily due to (i) additional SG&A from the Powerband Acquisition, (ii) an increase in advisory fees and other costs associated with M&A activity and (iii) an increase in employee related costs primarily to support growth initiatives in the business, partially offset by a decrease in variable compensation resulting from lower than expected operating results. For the first six months of 2017 and 2016, advisory fees and other costs associated with M&A activity totalled $2.9 million and $0.9 million, respectively. Manufacturing Facility Closures, Restructuring and Other Related Charges Manufacturing facility closures, restructuring and other related charges for the second quarter and first six months of 2017 totalled $0.4 million and $0.7 million, respectively, consisting primarily of asset impairment charges associated with small restructuring initiatives and the closure and post-closure activities related to the Columbia, South Carolina and TaraTape Fairless Hills, Pennsylvania manufacturing facilities. Manufacturing facility closures, restructuring and other related charges for the second quarter and first six months of 2016 totalled $2.1 million and $3.8 million, respectively, consisting primarily of costs related to the South Carolina Flood. Finance Costs Finance costs for the second quarter of 2017 totalled $1.6 million, a $0.1 million increase from $1.4 million in the second quarter of 2016 primarily due to an increase in interest expense as a result of higher average debt outstanding and higher average cost of debt due to an increase in the LIBOR rate. Finance costs for the second quarter of 2017 were consistent with the first quarter of 2017. Finance costs for the first six months of 2017 totalled $3.1 million, a $0.8 million increase from $2.3 million for the same period of 2016, primarily due to an increase in interest expense as a result of higher average debt outstanding and higher average cost of debt due to an increase in the LIBOR rate, as well as foreign exchange losses in the first six months of 2017 compared to foreign exchange gains in the same period of 2016. 8

Income Taxes The Company is subject to income taxation in multiple tax jurisdictions around the world. Accordingly, the Company's effective tax rate fluctuates depending on the geographic source of its earnings. The Company's effective tax rate is also impacted by tax planning strategies that the Company implements. Income tax expense is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The table below reflects the calculation of the Company s effective tax rate (in millions of US dollars): Three months ended Six months ended 2017 2016 2017 2016 $ $ $ $ Income tax expense 4.0 5.6 8.9 8.6 Earnings before income tax expense 14.0 19.3 32.4 31.8 Effective tax rate 28.3% 29.1% 27.4% 27.1% IPG Net Earnings IPG Net Earnings for the second quarter of 2017 totalled $10.2 million, a $3.5 million decrease from $13.7 million for the second quarter of 2016, primarily due to a decrease in gross profit and an increase in SG&A, partially offset by a decrease in manufacturing facility closures, restructuring and other related charges and income tax expense. IPG Net Earnings for the second quarter of 2017 decreased $3.3 million from $13.5 million for the first quarter of 2017, primarily due to an increase in SG&A and a decrease in gross profit. IPG Net Earnings for the first six months of 2017 totalled $23.7 million, a $0.5 million increase from $23.2 million for the same period of 2016, primarily due to an increase in gross profit and a decrease in manufacturing facility closures, restructuring and other related charges, partially offset by an increase in SG&A. Non-GAAP Financial Measures This MD&A contains certain non-gaap financial measures as defined under applicable securities legislation, including EBITDA, adjusted EBITDA and free cash flows (please see the Cash Flows section below for a description and reconciliation of free cash flows). The Company believes such non- GAAP financial measures improve the period-to-period comparability of the Company s results by providing more insight into the performance of the ongoing core business operations. As required by applicable securities legislation, the Company has provided definitions of those measures and reconciliations of those measures to the most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-gaap financial measures to their most directly comparable GAAP financial measures set forth below and should consider non-gaap financial measures only as a supplement to, and not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. EBITDA and Adjusted EBITDA A reconciliation of the Company s EBITDA, a non-gaap financial measure, to net earnings (loss), the most directly comparable GAAP financial measure, is set out in the EBITDA reconciliation table below. EBITDA should not be construed as earnings (loss) before income taxes, net earnings (loss) or cash flows from operating activities as determined by GAAP. The Company defines EBITDA as net earnings (loss) before (i) interest and other finance costs; (ii) income tax expense (benefit); (iii) amortization of intangible assets; and (iv) depreciation of property, plant and equipment. The Company defines 9

adjusted EBITDA as EBITDA before (i) manufacturing facility closures, restructuring and other related charges (recoveries); (ii) share-based compensation expense (benefit); (iii) impairment of goodwill; (iv) impairment (reversal of impairment) of long-lived assets and other assets; (v) write-down on assets classified as held-for-sale; (vi) (gain) loss on disposal of property, plant and equipment; and (vii) other discrete items as shown in the table below. The terms EBITDA and adjusted EBITDA do not have any standardized meanings prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. EBITDA and adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered as alternatives to cash flows from operating activities or as alternatives to net earnings (loss) as indicators of the Company s operating performance or any other measures of performance derived in accordance with GAAP. The Company has included these non-gaap financial measures because it believes that they allow investors to make a more meaningful comparison between periods of the Company s performance, underlying business trends and the Company s ongoing operations. The Company further believes these measures may be useful in comparing its operating performance with the performance of other companies that may have different financing and capital structures, and tax rates. Adjusted EBITDA excludes costs that are not considered by management to be representative of the Company s underlying core operating performance, including certain non-operating expenses, non-cash expenses and non-recurring expenses. In addition, EBITDA and adjusted EBITDA are used by management to set targets and are metrics that, among others, can be used by the Company s Compensation Committee to establish performance bonus metrics and payout, and by the Company s lenders and investors to evaluate the Company s performance and ability to service its debt, finance capital expenditures and acquisitions, and provide for the payment of dividends to shareholders. EBITDA and Adjusted EBITDA Reconciliation to Net Earnings (In millions of US dollars) (Unaudited) Three months ended Six months ended March 31, 2017 2017 2016 2017 2016 $ $ $ $ $ Net earnings 10.1 13.4 13.7 23.5 23.2 Interest and other finance costs 1.6 1.6 1.4 3.1 2.3 Income tax expense 4.0 4.9 5.6 8.9 8.6 Depreciation and amortization 8.4 8.3 7.4 16.6 14.6 EBITDA 24.0 28.2 28.1 52.2 48.7 Manufacturing facility closures, restructuring and other related charges 0.4 0.3 2.1 0.7 3.8 Share-based compensation expense 4.0 1.2 2.5 5.2 4.1 Impairment (reversal of impairment) of long-lived assets and other assets 0.0 (0.0) 0.1-0.2 Loss on disposal of property, plant and equipment 0.1 0.0 0.1 0.1 0.1 Adjusted EBITDA 28.5 29.7 33.0 58.1 57.0 Adjusted EBITDA totalled $28.5 million for the second quarter of 2017, a $4.5 million or 13.7% decrease from $33.0 million for the second quarter of 2016, primarily due to a decrease in gross profit mainly related to the non-recurrence of $4.5 million of South Carolina Flood Insurance Proceeds recorded in the second quarter of 2016. Included in adjusted EBITDA for the second quarter of 2017 and 2016 are advisory fees and other costs associated with M&A activity totalling $2.3 million and $0.8 million, respectively. Adjusted EBITDA for the second quarter of 2017 decreased $1.2 million or 4.0% from $29.7 million for the first quarter of 2017, primarily due to a decrease in gross profit mainly related to the non-recurrence of $2.1 million of South Carolina Flood Insurance Proceeds recorded in the first quarter of 2017. Included in adjusted EBITDA for the first quarter of 2017 are advisory fees and other costs associated with M&A activity totalling $0.5 million. 10

Adjusted EBITDA for the first six months of 2017 totalled $58.1 million, a $1.1 million or 2.0% increase from $57.0 million for the same period in 2016, primarily due to an increase in gross profit, partially offset by an increase in SG&A. Included in adjusted EBITDA for the first six months of 2017 and 2016 are advisory fees and other costs associated with M&A activity totalling $2.9 million and $0.9 million, respectively. Off-Balance Sheet Arrangements There have been no material changes with respect to off-balance sheet arrangements since December 31, 2016 outside of the Company s ordinary course of business. Reference is made to the section entitled Off-Balance Sheet Arrangements in the Company s MD&A as of and for the year ended December 31, 2016 ( 2016 MD&A ). Working Capital The Company uses Days Inventory to measure inventory performance. Days Inventory decreased to 64 in the second quarter of 2017 from 68 in the second quarter of 2016 and increased from 62 in the first quarter of 2017. Inventories increased $13.3 million to $116.8 million as of 2017 from $103.5 million as of December 31, 2016, primarily due to a planned seasonal inventory build and lower than expected sales volume in the second quarter of 2017. The Company uses Days Sales Outstanding ( DSO ) to measure trade receivables. DSO increased to 41 in the second quarter of 2017 from 40 in the second quarter of 2016 and the first quarter of 2017. Trade receivables increased $4.0 million to $94.1 million as of 2017 from $90.1 million as of December 31, 2016, primarily due to an increase in the amount and timing of revenue invoiced later in the second quarter of 2017 as compared to later in the fourth quarter of 2016. The calculations are shown in the following tables: Three months ended Three months ended March 31, March 31, 2017 2017 2016 2017 2017 2016 Cost of sales (1) $ 162.8 $ 158.0 $ 149.7 Revenue (1) $ 210.2 $ 207.1 $ 201.5 Days in quarter 91 90 91 Days in quarter 91 90 91 Cost of sales per day (1) $ 1.79 $ 1.76 $ 1.65 Revenue per day (1) $ 2.31 $ 2.30 $ 2.21 Average inventory (1) $ 115.1 $ 108.4 $ 111.8 Trade receivables (1) $ 94.1 $ 92.0 $ 88.0 Days inventory 64 62 68 DSO 41 40 40 Days inventory is calculated as follows: Cost of sales Days in quarter = Cost of sales per day (Beginning inventory + Ending inventory) 2 = Average inventory Average inventory Cost of goods sold per day = Days inventory (1) In millions of US dollars DSO is calculated as follows: Revenue Days in quarter = Revenue per day Ending trade receivables Revenue per day = DSO Accounts payable and accrued liabilities decreased $24.0 million to $74.0 million as of 2017 from $98.0 million as of December 31, 2016, primarily due to the timing of payments for inventory as well as SG&A, including annual payments made in 2017 for 2016 liabilities mainly related to variable compensation earned in 2016. Liquidity and Borrowings The Company relies upon cash flows from operations and funds available under its Revolving Credit Facility to meet working capital requirements as well as to fund capital expenditures, M&A, dividends, share repurchases, obligations under its other debt instruments, and other general corporate purposes. 11

On June 9, 2017, the Company amended its Revolving Credit Facility to increase its borrowing limit by $150.0 million, bringing the Revolving Credit Facility s credit limit to $450.0 million. The amended credit agreement continues to include an incremental accordion feature of $150.0 million, enabling the Company to further increase the credit limit of the Revolving Credit Facility if needed, subject to the credit agreement s existing terms and lender approval. The Company s liquidity risk management processes attempt to (i) maintain a sufficient amount of cash and (ii) ensure that the Company has financing sources for a sufficient authorized amount. The Company establishes budgets, cash estimates and cash management policies with a goal of ensuring it has the necessary funds to fulfil its obligations for the foreseeable future. The Company believes it has sufficient cash on hand, and that it will generate sufficient funds from cash flows from operating activities, to meet its ongoing expected capital expenditures, working capital and discretionary dividend payment funding needs for at least the next twelve months. In addition, funds available under the Revolving Credit Facility may be used, as needed, to fund more significant strategic initiatives. As of 2017, the Company had drawn a total of $281.5 million against the Revolving Credit Facility, which consisted of $274.7 million of borrowings and $6.8 million of standby letters of credit. This resulted in loan availability of $168.5 million. In addition, the Company had $10.7 million of cash, yielding total cash and loan availability of $179.2 million as of 2017 as compared to total cash and loan availability of $158.2 million as of December 31, 2016. The Revolving Credit Facility is priced primarily on the LIBOR rate for US Dollar-denominated loans, or other floating rates for revolving credit loans denominated in an alternative currency, plus a spread varying between 100 and 225 basis points (150 basis points as of 2017 and December 31, 2016) and any mandatory costs. The spread depends on the consolidated total leverage ratio and increases as the consolidated total leverage ratio increases. As a result of an increase in the consolidated total leverage ratio, the Company s credit spread is expected to increase from 150 basis points to 200 basis points in August 2017. As of 2017, $204.0 million of borrowings was priced at 30-day US Dollar LIBOR and $70.7 million priced at 30-day Canadian Dollar Offering Rate ( CDOR ). As of December 31, 2016, the full $161.0 million of borrowings was priced at 30-day US dollar LIBOR. The Revolving Credit Facility has, in summary, three financial covenants: (i) a consolidated total leverage ratio not to be greater than 3.25 to 1.00 with an allowable temporary increase to 3.75 to 1.00 for the four quarters following an acquisition with a price not less than $50.0 million, (ii) a consolidated debt service ratio not to be less than 1.50 to 1.00, and (iii) the aggregated amount of all capital expenditures in any fiscal year may not exceed $100.0 million (this was increased from $50.0 million under a January 2017 amendment to the Revolving Credit Facility). Prior to the January 2017 amendment, any portion of the then allowable $50.0 million not expended in the year could be carried over for expenditure in the following year but not carried over to any additional subsequent year thereafter. The Company was in compliance with all three financial covenants which were 2.50, 6.36 and $42.5 million, respectively, as of 2017. Cash Flows Cash flows from operating activities decreased in the second quarter of 2017 by $4.8 million to $19.6 million from $24.4 million in the second quarter of 2016 primarily due to the non-recurrence of South Carolina Flood Insurance Proceeds of $4.5 million recorded in the second quarter of 2016 and a larger increase in inventories mainly due to a planned seasonal inventory build and lower than expected sales volume in the second quarter of 2017. These impacts were partially offset by an increase in accounts payable in the second quarter of 2017 due to the timing of payments for inventory and SG&A. Cash flows from operating activities increased in the second quarter of 2017 by $30.2 million from an outflow of $10.6 million in the first quarter of 2017 primarily due to a large seasonal increase in working 12

capital in the first quarter of 2017 consisting mainly of a decrease in accounts payable largely associated with the timing of payments for inventory as well as SG&A. Cash flows from operating activities decreased in the first six months of 2017 by $14.0 million to $9.0 million from $23.1 million in the same period in 2016 primarily due to a larger decrease in accounts payable largely associated with the timing of payments for inventory and SG&A, partially offset by a smaller increase in accounts receivable resulting primarily from the timing of revenue invoiced. Cash flows used for investing activities increased in the second quarter of 2017 by $78.4 million to $92.2 million from $13.8 million in the second quarter of 2016 and by $70.1 million from $22.1 million in the first quarter of 2017. Cash flows used for investing activities increased in the first six months of 2017 by $90.9 million to $114.3 million from $23.3 million in the same period in 2016. The increase in all periods is primarily due to an increase in restricted cash related to amounts transferred into a third-party trust account for the Cantech Acquisition. Cash flows from financing activities increased in the second quarter of 2017 by $90.0 million to a $77.8 million inflow from a $12.2 million outflow in the second quarter of 2016 and by $62.0 million from a $15.8 million inflow in the first quarter of 2017 primarily due to an increase in borrowings to fund the Cantech Acquisition. Cash flows from financing activities increased in the first six months of 2017 by $98.4 million to a $93.6 million inflow from a $4.8 million outflow in the same period in 2016, primarily due to an increase in borrowings to fund the Cantech Acquisition and a decrease in repayments of debt in 2017 compared to 2016. The Company is including free cash flows, a non-gaap financial measure, because it is used by management and investors in evaluating the Company s performance and liquidity. Free cash flows does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Free cash flows should not be interpreted to represent residual cash flow available for discretionary purposes, as it excludes other mandatory expenditures such as debt service. Free cash flows, defined by the Company as cash flows from operating activities less purchases of property, plant and equipment, decreased in the second quarter of 2017 by $11.4 million to negative $0.8 million from $10.6 million in the second quarter of 2016. Free cash flows decreased by $33.2 million to negative $33.5 million in the first six months of 2017 from negative $0.2 million in the first six months of 2016. The change in both periods is primarily due to an increase in capital expenditures and a decrease in cash flows from operating activities. Free cash flows in the second quarter of 2017 increased $31.9 million from negative $32.7 million in the first quarter of 2017, primarily due to an increase in cash flows from operating activities. A reconciliation of free cash flows to cash flows from operating activities, the most directly comparable GAAP financial measure, is set forth below. Free Cash Flows Reconciliation (In millions of US dollars) (Unaudited) Three months ended Six months ended March 31, 2017 2017 2016 2017 2016 $ $ $ $ $ Cash flows from (used for) operating activities 19.6 (10.6) 24.4 9.0 23.1 Less purchases of property, plant and equipment (20.4) (22.1) (13.8) (42.5) (23.3) Free cash flows (0.8) (32.7) 10.6 (33.5) (0.2) 13

Capital Resources Capital expenditures totalled $20.4 million and $42.5 million in the three and six months ended 2017, respectively, and were funded by the Revolving Credit Facility and cash flows from operations. The Company had commitments to suppliers to purchase machines and equipment totalling $30.4 million as of 2017 that are expected to be paid out in the next twelve months. These capital expenditures and commitments are primarily to support the water-activated tape capacity expansion at the Midland, North Carolina manufacturing facility and other strategic and growth initiatives discussed in the section entitled Capital Resources in the Company s 2016 MD&A. The Portuguese Shrink Film Project (1) was completed within the expected timeline and under budget. All other initiatives are currently progressing as planned both in terms of timeline and expenditure levels. (1) Portuguese Shrink Film Project refers to the shrink film capacity expansion project at the Portugal manufacturing facility. Contractual Obligations There have been no material changes with respect to contractual obligations since December 31, 2016 outside of the Company s ordinary course of business. Reference is made to the section entitled Contractual Obligations in the Company s 2016 MD&A. Capital Stock and Dividends As of 2017, there were 59,287,210 common shares of the Company outstanding. The table below summarizes share-based compensation activity that occurred during the following periods: Three months ended Six months ended 2017 2016 2017 2016 Equity-settled Stock options exercised 161,875 60,200 226,875 82,500 Cash proceeds (in millions of US dollars) $1.3 $0.4 $1.4 $0.5 Cash-settled Stock Appreciation Rights exercised - 6,250 13,250 147,727 PSUs granted - - 358,377 392,572 PSUs settled 139,200-139,200 - DSUs granted 32,280-40,242 11,714 Cash settlements (in millions of US dollars) $4.2 $0.1 $4.4 $1.3 On February 17, 2017, the Board of Directors approved amendments to the Performance Share Unit ( PSU ) Plan and Deferred Share Unit ( DSU ) Plan to provide for only cash settlement of PSU and DSU awards, respectively. As a result of the amendments, the Company remeasured the fair value of the awards on the amendment date and will continue to do so, prospectively at each reporting period end date and at award settlement, and present the cash-settled awards as a liability in the consolidated balance sheets. Changes in the fair value of the liability are reflected in earnings in SG&A. As of 2017, $9.7 million was recorded in share-based compensation liabilities, current and $4.9 million was recorded in share-based compensation liabilities, non-current. On June 15, 2017, the Board of Directors approved the settlement of PSUs granted in 2014 which had been earned and vested in accordance with the PSU plan. The PSU settlement occurred on June 22, 2017. The number of PSUs earned was 150% of the grant amount based on the total shareholder return ranking versus a specified peer group of companies as of June 11, 2017. 14

The table below presents the share-based compensation expense recorded in earnings in SG&A by award type (in millions of US dollars): Three months ended Six months ended 2017 2016 2017 2016 $ $ $ $ Equity-settled 0.1 0.1 0.2 0.3 Cash-settled 3.9 2.4 5.0 3.8 Total 4.0 2.5 5.2 4.1 The Company paid cash dividends of $0.14 per common share on March 31 and 2017 to shareholders of record at the close of business on March 21 and June 15, 2017, respectively. On August 10, 2017, the Board of Directors declared a quarterly cash dividend of $0.14 per common share payable on September 29, 2017 to shareholders of record at the close of business on September 15, 2017. The dividends paid and payable in 2017 by the Company are eligible dividends as defined in subsection 89(1) of the Income Tax Act (Canada). The Company s normal course issuer bid ( NCIB ) which expired on July 13, 2017 was renewed for a twelve-month period starting on July 17, 2017. Under the renewed NCIB, the Company may repurchase for cancellation up to 4,000,000 common shares. As of August 10, 2017, no shares have been repurchased under the NCIB. Financial Risk, Objectives and Policies The Company is exposed to a risk of change in cash flows due to the fluctuations in interest rates applicable on its variable rate Revolving Credit Facility and other floating rate borrowings. To minimize the long-term cost of floating rate borrowings, the Company entered into interest rate swap agreements that are designated as cash flow hedges. The terms of the interest rate swap agreements are as follows (in millions of US dollars): Effective Date Maturity Notional amount Settlement Fixed interest rate paid $ % March 18, 2015 November 18, 2019 40.0 Monthly 1.610 August 18, 2015 August 20, 2018 60.0 Monthly 1.197 June 8, 2017 June 20, 2022 40.0 Monthly 1.790 August 20, 2018 August 18, 2023 60.0 Monthly 2.045 On July 21, 2017, the Company entered into an interest rate swap agreement to minimize the long-term cost of borrowings priced at the 30-day CDOR. The terms of the interest rate swap agreement are as follows (in millions of Canadian dollars): Effective Date Maturity Notional amount Settlement Fixed interest rate paid $ % July 21, 2017 July 18, 2022 CDN 90.0 Monthly 1.154 The notional amount will decrease by CDN$18.0 million on the 18 th of July of every year until settlement. 15

Litigation The Company is engaged from time-to-time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all of the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with external legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole, and accordingly, no material amounts have been recorded as of 2017. Critical Accounting Judgments, Estimates and Assumptions The preparation of the Company s Financial Statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Significant changes in the underlying assumptions could result in significant changes to these estimates. Consequently, management reviews these estimates on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The judgments, estimates and assumptions applied in the Financial Statements were the same as those applied in the Company s most recent annual audited consolidated financial statements, except for (i) the estimate of the provision for income taxes, which is determined in the Financial Statements using the estimated weighted average annual effective income tax rate applied to the earnings before income tax expense of the interim period, which may have to be adjusted in a subsequent interim period of the financial year if the estimate of the annual income tax rate changes and (ii) the re-measurement of the defined benefit liability, which is required at year-end and if triggered by plan amendment or settlement during interim periods. The Financial Statements should be read in conjunction with the Company s 2016 annual audited consolidated financial statements. New Standards and Interpretations Issued but Not Yet Effective Certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Company. Management anticipates that all the relevant pronouncements will be adopted in the second reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Company s Financial Statements, are detailed as follows: IFRS 15 Revenue from Contracts with Customers replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue related interpretations. IFRS 15 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized at a point in time or over time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018. Management has performed a preliminary review of the new guidance as compared to the Company s current accounting policies, and began a review of its sales contracts. Based on its initial evaluation, management does not expect the new guidance to materially impact the Company s Financial Statements. Management plans to finalize its review and determine the method of adoption in the current year. IFRS 9 (2014) - Financial Instruments was issued in July 2014 and differs in some regards from IFRS 9 (2013) which the Company adopted effective January 1, 2015. IFRS 9 (2014) includes updated guidance on the classification and measurement of financial assets. The final standard also amends the impairment model by introducing a new expected credit loss model for calculating impairment. The mandatory effective date of IFRS 9 (2014) is for annual periods beginning on or after January 1, 2018 and must be applied retrospectively with some exemptions. Early adoption is permitted. Based on its initial evaluation, management does not expect the new guidance to materially impact the Company s Financial Statements. Management plans to finalize its review and determine the method of adoption in the current year. 16

IFRS 16 - Leases which will replace IAS 17 - Leases was issued in January 2016. IFRS 16 eliminates the classification of an operating lease and requires lessees to recognize a right-of-use asset and a lease liability in the statement of financial position for all leases with exemptions permitted for short-term leases and leases of low value assets. In addition, IFRS 16 changes the definition of a lease; sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and option periods; changes the accounting for sale and leaseback arrangements; largely retains IAS 17 s approach to lessor accounting and introduces new disclosure requirements. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019 with early adoption permitted in certain circumstances. Management is currently assessing but has not yet determined the impact of this new standard on the Company s Financial Statements. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company s Financial Statements. Internal Control Over Financial Reporting In accordance with the Canadian Securities Administrators National Instrument 52-109, Certification of Disclosure in Issuers Annual and Interim Filings ( NI 52-109 ), the Company has filed interim certificates signed by the Chief Executive Officer ( CEO ) and the Chief Financial Officer ( CFO ) that, among other things, report on the design of disclosure controls and procedures and design of internal control over financial reporting. With regards to the annual certification requirements of NI 52-109, the Company relies on the statutory exemption contained in section 8.2 of NI 52-109, which allows it to file with the Canadian securities regulatory authorities the certificates required under the Sarbanes-Oxley Act of 2002 at the same time such certificates are required to be filed in the United States of America. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and its compliance with GAAP (as derived in accordance with IFRS) in its consolidated financial statements. The CEO and CFO of the Company have evaluated whether there were changes to the Company's internal control over financial reporting during the Company s most recent interim period that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. The CEO and the CFO have concluded that the Company s internal control over financial reporting as of 2017 was effective. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Additional Information Additional information relating to the Company, including its Form 20-F filed in lieu of an Annual Information Form for 2016, is available on the Company s website (www.itape.com) as well as under the Company s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Forward-Looking Statements Certain statements and information included in this MD&A constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, "forward-looking statements"), which are made in reliance upon the protections provided by such legislation for forward-looking statements. All statements other than statements of historical facts included in this MD&A, including statements regarding the Company s industry and the Company s outlook, prospects, plans, financial position, future transactions, 17

sales and financial results, income tax and effective tax rate, availability of funds and credit, expected credit spread, level of indebtedness, payment of dividends, capital and other significant expenditures, working capital requirements, liquidity, the impacts of new accounting standards, judgments, estimates, assumptions, litigation and business strategy, may constitute forward-looking statements. These forwardlooking statements are based on current beliefs, assumptions, expectations, estimates, forecasts and projections made by the Company s management. Words such as "may," "will," "should," "expect," "continue," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "seek" or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: business conditions and growth or declines in the Company s industry, the Company s customers industries and the general economy; the anticipated benefits from the Company s manufacturing facility closures and other restructuring efforts; the anticipated benefits from the Company s acquisitions and partnerships; the anticipated benefits from the Company s capital expenditures; the quality, and market reception, of the Company s products; the Company s anticipated business strategies; risks and costs inherent in litigation; the Company s ability to maintain and improve quality and customer service; anticipated trends in the Company s business; anticipated cash flows from the Company s operations; availability of funds under the Company s Revolving Credit Facility; and the Company s ability to continue to control costs. The Company can give no assurance that these statements and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. Readers are cautioned not to place undue reliance on any forward-looking statement. For additional information regarding some important factors that could cause actual results to differ materially from those expressed in these forward-looking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read "Item 3. Key Information - Risk Factors, Item 5 Operating and Financial Review and Prospects (Management s Discussion & Analysis) and statements located elsewhere in the Company s annual report on Form 20-F for the year ended December 31, 2016 and the other statements and factors contained in the Company s filings with the Canadian securities regulators and the US Securities and Exchange Commission. Each of the forward-looking statements speaks only as of the date of this MD&A. The Company will not update these statements unless applicable securities laws require it to do so. 18

Intertape Polymer Group Inc. Interim Condensed Consolidated Financial Statements 2017 Unaudited Interim Condensed Consolidated Financial Statements Consolidated Earnings 2 Consolidated Comprehensive Income 3 Consolidated Changes in Equity 4 to 5 Consolidated Cash Flows 6 Consolidated Balance Sheets 7 Notes to Interim Condensed Consolidated Financial Statements 8 to 20

Intertape Polymer Group Inc. Consolidated Earnings Periods ended (In thousands of US dollars, except per share amounts) (Unaudited) Three months ended Six months ended 2017 2016 2017 2016 $ $ $ $ Revenue 210,158 201,517 417,278 392,333 Cost of sales 162,783 149,715 320,763 299,435 Gross profit 47,375 51,802 96,515 92,898 Selling, general and administrative expenses 28,717 26,282 54,690 49,666 Research expenses 2,643 2,734 5,621 5,276 31,360 29,016 60,311 54,942 Operating profit before manufacturing facility closures, restructuring and other related charges 16,015 22,786 36,203 37,956 Manufacturing facility closures, restructuring and other related charges (Note 4) 410 2,090 677 3,823 Operating profit 15,605 20,696 35,526 34,133 Finance costs (Note 3) Interest 1,283 1,022 2,431 2,004 Other expense, net 274 411 702 320 1,557 1,433 3,133 2,324 Earnings before income tax expense 14,048 19,263 32,393 31,809 Income tax expense (Note 5) Current 2,753 3,197 5,446 5,273 Deferred 1,222 2,408 3,441 3,348 3,975 5,605 8,887 8,621 Net earnings 10,073 13,658 23,506 23,188 Net earnings (loss) attributable to: Company shareholders 10,199 13,658 23,661 23,188 Non-controlling interests (126) - (155) - 10,073 13,658 23,506 23,188 Earnings per share attributable to Company shareholders (Note 9) Basic 0.17 0.23 0.40 0.40 Diluted 0.17 0.22 0.40 0.38 The accompanying notes are an integral part of the interim condensed consolidated financial statements. Note 3 presents additional information on consolidated earnings. 2

Intertape Polymer Group Inc. Consolidated Comprehensive Income Periods ended (In thousands of US dollars) (Unaudited) Three months ended Six months ended 2017 2016 2017 2016 $ $ $ $ Net earnings 10,073 13,658 23,506 23,188 Other comprehensive income (loss) Change in fair value of interest rate swap agreements designated as cash flow hedges (1) 87 (205) 273 (1,013) Change in cumulative translation adjustments 2,475 (601) 4,912 4,081 Items that will be subsequently reclassified to net earnings 2,562 (806) 5,185 3,068 Comprehensive income for the period 12,635 12,852 28,691 26,256 Comprehensive income (loss) for the period attributable to: Company shareholders 12,749 12,852 28,523 26,256 Non-controlling interests (114) - 168-12,635 12,852 28,691 26,256 (1) Presented net of the change in the deferred income tax expense of $53 and $167 for the three and six months ended June 30, 2017, respectively, and the deferred income tax benefit of $126 and $621 for the three and six months ended 2016, respectively. Refer to Note 11 for additional information on the Company s cash flow hedges. The accompanying notes are an integral part of the interim condensed consolidated financial statements. 3

Intertape Polymer Group Inc. Consolidated Changes in Equity Six months ended 2016 (In thousands of US dollars, except for number of common shares) (Unaudited) Accumulated other comprehensive loss Cumulative Equity attributable translation Reserve for to Company Capital stock Contributed adjustment cash flow shareholders and Number Amount surplus account hedge Total Deficit total equity $ $ $ $ $ $ $ Balance as of December 31, 2015 58,667,535 347,325 23,298 (20,407) (272) (20,679) (133,216) 216,728 Transactions w ith ow ners Exercise of stock options (Note 9) 82,500 478 478 Change in excess tax benefit on exercised share-based aw ards 99 (99) - Change in excess tax benefit on outstanding share-based aw ards 1,739 1,739 Share-based compensation (Note 9) 2,528 2,528 Share-based compensation expense credited to capital on options exercised (Note 9) 154 (154) - Repurchases of common shares (Note 9) (147,200) (862) (835) (1,697) Dividends on common shares (Note 9) (15,221) (15,221) (64,700) (131) 4,014 (16,056) (12,173) Net earnings 23,188 23,188 Other comprehensive income Change in fair value of interest rate sw ap agreements designated as cash flow hedges (net of the deferred income tax benefit of $621) (Note 11) (1,013) (1,013) (1,013) Change in cumulative translation adjustments 4,081 4,081 4,081 4,081 (1,013) 3,068-3,068 Comprehensive income for the period 4,081 (1,013) 3,068 23,188 26,256 Balance as of 2016 58,602,835 347,194 27,312 (16,326) (1,285) (17,611) (126,084) 230,811 The accompanying notes are an integral part of the interim condensed consolidated financial statements. 4

Intertape Polymer Group Inc. Consolidated Changes in Equity Six months ended 2017 (In thousands of US dollars, except for number of common shares) (Unaudited) Accumulated other comprehensive loss Cumulative Equity translation Reserve for attributable Non- Capital stock Contributed adjustment cash flow to Company controlling Total Number Amount surplus account hedge Total Deficit shareholders interests equity $ $ $ $ $ $ $ $ $ Balance as of December 31, 2016 59,060,335 351,203 29,585 (19,511) (136) (19,647) (124,605) 236,536 6,407 242,943 Transactions w ith ow ners Exercise of stock options (Note 9) 226,875 1,362 1,362 1,362 Change in excess tax benefit on exercised share-based aw ards 500 (500) - - Change in excess tax benefit on outstanding share-based aw ards (2,198) 1,442 (756) (756) Share-based compensation (Note 9) (7,874) (5,228) (13,102) (13,102) Share-based compensation expense credited to capital on options exercised (Note 9) 495 (495) - - Dividends on common shares (Note 9) (16,546) (16,546) (16,546) 226,875 2,357 (11,067) (20,332) (29,042) (29,042) Net earnings (loss) 23,661 23,661 (155) 23,506 Other comprehensive income Change in fair value of interest rate sw ap agreements designated as cash flow hedges (net of the deferred income tax expense of $167) (Note 11) 273 273 273 273 Change in cumulative translation adjustments 4,589 4,589 4,589 323 4,912 4,589 273 4,862-4,862 323 5,185 Comprehensive income for the period 4,589 273 4,862 23,661 28,523 168 28,691 Non-controlling interest arising from investment in new ly-formed enterprise (Note 10) 15 15 Balance as of 2017 59,287,210 353,560 18,518 (14,922) 137 (14,785) (121,276) 236,017 6,590 242,607 The accompanying notes are an integral part of the interim condensed consolidated financial statements. 5

Intertape Polymer Group Inc. Consolidated Cash Flows Periods ended (In thousands of US dollars) (Unaudited) OPERATING ACTIVITIES 2017 2016 2017 2016 $ $ $ $ Net earnings 10,073 13,658 23,506 23,188 Adjustments to net earnings Depreciation and amortization 8,363 7,397 16,638 14,632 Income tax expense 3,975 5,605 8,887 8,621 Interest expense 1,283 1,022 2,431 2,004 Non-cash charges (recoveries) in connection w ith manufacturing facility closures, restructuring and other related charges 209 656 (89) 1,184 (Reversal of impairment) impairment of inventories (26) 804 (69) 1,227 Share-based compensation expense 3,976 2,542 5,164 4,136 Pension, post-retirement and other long-term employee benefits 698 703 1,383 1,410 Other adjustments for non-cash items (569) 492 (394) 287 Income taxes paid, net (2,461) (1,965) (2,762) (2,164) Contributions to defined benefit plans (1,836) (510) (2,429) (688) Cash flow s from operating activities before changes in w orking capital items 23,685 30,404 52,266 53,837 Changes in w orking capital items Trade receivables (1,176) (2,515) (3,406) (9,056) Inventories (2,927) (443) (12,355) (11,559) Parts and supplies (557) (72) (1,164) (537) Other current assets (1,200) (1,143) 1,245 1,313 Accounts payable and accrued liabilities and share-based compensation liabilities, current 2,196 (1,856) (26,263) (10,969) Provisions (432) 8 (1,311) 30 (4,096) (6,021) (43,254) (30,778) Cash flow s from operating activities 19,589 24,383 9,012 23,059 INVESTING ACTIVITIES Three months ended Six months ended Purchases of property, plant and equipment (20,392) (13,810) (42,516) (23,304) Restricted cash (71,785) - (71,785) - Other investing activities 14 5 33 (45) Cash flow s from investing activities (92,163) (13,805) (114,268) (23,349) FINANCING ACTIVITIES Proceeds from borrow ings 113,966 24,668 153,477 89,303 Repayment of borrow ings (27,081) (28,226) (41,289) (75,589) Interest paid (1,391) (1,408) (2,599) (2,223) Proceeds from exercise of stock options 1,256 363 1,362 478 Repurchases of common shares - - - (1,697) Dividends paid (8,365) (7,574) (16,681) (15,083) Other financing activities (545) - (638) - Cash flow s from financing activities 77,840 (12,177) 93,632 (4,811) Net increase (decrease) in cash 5,266 (1,599) (11,624) (5,101) Effect of foreign exchange differences on cash 1,353 349 1,393 509 Cash, beginning of period 4,106 14,273 20,956 17,615 Cash, end of period 10,725 13,023 10,725 13,023 The accompanying notes are an integral part of the interim condensed consolidated financial statements. 6

Intertape Polymer Group Inc. Consolidated Balance Sheets As of (In thousands of US dollars) December 31, 2017 2016 (Unaudited) (Audited) $ $ ASSETS Current assets Cash 10,725 20,956 Restricted cash (Note 6) 71,785 - Trade receivables 94,078 90,122 Inventories 116,790 103,470 Parts and supplies 17,591 16,368 Other current assets 10,633 11,321 321,602 242,237 Property, plant and equipment (Note 7) 258,250 233,478 Goodwill 31,617 30,841 Intangible assets 33,476 34,050 Deferred tax assets 32,346 36,611 Other assets 5,546 3,380 Total assets 682,837 580,597 LIABILITIES Current liabilities Accounts payable and accrued liabilities 73,986 98,016 Share-based compensation liabilities, current (Note 9) 11,549 2,200 Provisions, current 1,509 3,851 Borrowings, current (Note 8) 9,253 7,604 96,297 111,671 Borrowings, non-current (Note 8) 284,636 172,221 Pension, post-retirement and other long-term employee benefits 29,878 30,832 Share-based compensation liabilities, non-current (Note 9) 4,855 296 Non-controlling interest put options (Note 11) 10,519 10,020 Deferred tax liabilities 9,504 9,332 Provisions, non-current 2,705 2,040 Other liabilities 1,836 1,242 440,230 337,654 EQUITY Capital stock (Note 9) 353,560 351,203 Contributed surplus 18,518 29,585 Deficit (121,276) (124,605) Accumulated other comprehensive loss (14,785) (19,647) Total equity attributable to Company shareholders 236,017 236,536 Non-controlling interests 6,590 6,407 Total equity 242,607 242,943 Total liabilities and equity 682,837 580,597 The accompanying notes are an integral part of the interim condensed consolidated financial statements. 7

Intertape Polymer Group Inc. Notes to Interim Condensed Consolidated Financial Statements 2017 (In US dollars, tabular amounts in thousands, except per share data and as otherwise noted) (Unaudited) 1 - GENERAL BUSINESS DESCRIPTION Intertape Polymer Group Inc. (the Parent Company ), incorporated under the Canada Business Corporations Act, has its principal administrative offices in Montreal, Québec, Canada and in Sarasota, Florida, U.S.A. The address of the Parent Company s registered office is 800 Place Victoria, Suite 3700, Montreal, Québec H4Z 1E9, c/o Fasken Martineau DuMoulin LLP. The Parent Company s common shares are listed on the Toronto Stock Exchange ( TSX ) in Canada. The Parent Company and its subsidiaries (together referred to as the Company ) develop, manufacture and sell a variety of paper and film based pressure sensitive and water activated tapes, polyethylene and specialized polyolefin films, woven coated fabrics and complementary packaging systems for industrial and retail use. Intertape Polymer Group Inc. is the Company s ultimate parent. 2 - ACCOUNTING POLICIES Basis of Presentation and Statement of Compliance The unaudited interim condensed consolidated financial statements ( Financial Statements ) present the Company s consolidated balance sheets as of 2017 and December 31, 2016, as well as its consolidated earnings, comprehensive income and cash flows for the three and six months ended June 30, 2017 and 2016 and the changes in equity for the six months ended 2017 and 2016. These Financial Statements have been prepared in accordance with International Accounting Standard ( IAS ) 34 Interim Financial Reporting and are expressed in United States ( US ) dollars. Accordingly, certain information and footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ( IFRS ), as issued by the International Accounting Standards Board ("IASB"), have been omitted or condensed. These Financial Statements use the same accounting policies and methods of computation as compared with the Company s most recent annual audited consolidated financial statements, except for (i) the estimate of the provision for income taxes, which is determined in these Financial Statements using the estimated weighted average annual effective income tax rate applied to the earnings before income tax expense of the interim period, which may have to be adjusted in a subsequent interim period of the financial year if the estimate of the annual income tax rate changes and (ii) the re-measurement of the defined benefit liability, which is required at year-end and if triggered by plan amendment or settlement during interim periods. These Financial Statements reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results for these interim periods. These adjustments are of a normal recurring nature. These Financial Statements were authorized for issuance by the Company s Board of Directors on August 10, 2017. 8

Critical Accounting Judgments, Estimates and Assumptions The preparation of these Financial Statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Significant changes in the underlying assumptions could result in significant changes to these estimates. Consequently, management reviews these estimates on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The judgments, estimates and assumptions applied in these Financial Statements were the same as those applied in the Company s most recent annual audited consolidated financial statements other than (as noted above) the accounting policies and methods of computation for the estimate of the provision for income taxes and the re-measurement of the defined benefit liability. New Standards and Interpretations Issued but Not Yet Effective Certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Company. Management anticipates that all the relevant pronouncements will be adopted in the first reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Company s Financial Statements, are detailed as follows: IFRS 15 Revenue from Contracts with Customers replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue related interpretations. IFRS 15 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized at a point in time or over time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018. Management has performed a preliminary review of the new guidance as compared to the Company s current accounting policies, and began a review of its sales contracts. Based on its initial evaluation, management does not expect the new guidance to materially impact the Company s Financial Statements. Management plans to finalize its review and determine the method of adoption in the current year. IFRS 9 (2014) - Financial Instruments was issued in July 2014 and differs in some regards from IFRS 9 (2013) which the Company adopted effective January 1, 2015. IFRS 9 (2014) includes updated guidance on the classification and measurement of financial assets. The final standard also amends the impairment model by introducing a new expected credit loss model for calculating impairment. The mandatory effective date of IFRS 9 (2014) is for annual periods beginning on or after January 1, 2018 and must be applied retrospectively with some exemptions. Early adoption is permitted. Based on its initial evaluation, management does not expect the new guidance to materially impact the Company s Financial Statements. Management plans to finalize its review and determine the method of adoption in the current year. IFRS 16 - Leases which will replace IAS 17 - Leases was issued in January 2016. IFRS 16 eliminates the classification of an operating lease and requires lessees to recognize a right-of-use asset and a lease liability in the statement of financial position for all leases with exemptions permitted for short-term leases and leases of low value assets. In addition, IFRS 16 changes the definition of a lease; sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and option periods; changes the accounting for sale and leaseback arrangements; largely retains IAS 17 s approach to lessor accounting and introduces new disclosure requirements. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019 with early adoption permitted in certain circumstances. Management is currently assessing but has not yet determined the impact of this new standard on the Company s Financial Statements. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company s Financial Statements. 9

3 - INFORMATION INCLUDED IN CONSOLIDATED EARNINGS The following table describes the charges incurred by the Company which are included in the Company s consolidated earnings: Three months ended Six months ended 2017 2016 2017 2016 $ $ $ $ Employee benefit expense Wages, salaries and other short-term benefits 39,917 39,611 79,695 79,206 Termination benefits (93) 193 66 334 Share-based compensation expense 3,976 2,543 5,164 4,136 Pension, post-retirement and other long-term employee benefit plans: Defined benefit plans 719 725 1,425 1,455 Defined contributions plans 1,253 1,093 2,558 2,378 45,772 44,165 88,908 87,509 Finance costs - Interest Interest on borrowings 1,497 1,174 2,769 2,265 Amortization of debt issue costs on borrowings 147 108 276 216 Interest capitalized to property, plant and equipment (361) (260) (614) (477) 1,283 1,022 2,431 2,004 Finance costs - Other expense, net Foreign exchange loss (gain) 1 167 192 (170) Other costs, net 273 244 510 490 274 411 702 320 Additional information Depreciation of property, plant and equipment 7,482 7,086 14,908 14,017 Amortization of intangible assets 881 311 1,730 615 Impairment of assets 360 1,625 217 2,597 10

4 - MANUFACTURING FACILITY CLOSURES, RESTRUCTURING AND OTHER RELATED CHARGES The following tables describe the charges incurred by the Company which are included in the Company s consolidated earnings under the caption manufacturing facility closures, restructuring and other related charges: Three months ended Six months ended June 30 June 30 2017 2016 2017 2016 $ $ $ $ Impairment of property, plant and equipment 277 83 289 490 Equipment relocation 47 455 123 499 Revaluation and impairment of inventories 127 575 16 694 Termination benefits and other labor related (recoveries) costs (70) 161 (96) 435 Restoration and idle facility costs 20 898 33 1,653 Professional fees 25 401 41 535 Insurance proceeds - (483) - (483) Other (recoveries) costs (16) - 271-410 2,090 677 3,823 On October 4, 2015, the Columbia, South Carolina manufacturing facility was damaged by significant rainfall and subsequent severe flooding ( South Carolina Flood ). The damages sustained were considerable and resulted in the permanent closure of the Columbia, South Carolina manufacturing facility eight to nine months in advance of the planned shut down. The charges incurred in the three and six months ended 2017 were primarily related to asset impairment charges associated with small restructuring initiatives and the closure and post-closure activities related to the Columbia, South Carolina and TaraTape Fairless Hills, Pennsylvania manufacturing facilities. Included in Other costs in the table above were charges primarily related to product trials to support post-south Carolina Flood stencil production. The charges incurred in the three and six months ended 2016 were primarily related to the South Carolina Flood including real and personal property damage, site clean-up and environmental remediation costs, and professional fee costs related to the insurance claim process. Also included in manufacturing facility closures, restructuring and other related charges for the three months ended 2016 was $0.5 million in insurance claim settlement proceeds. The Company received a total of $5.0 million in insurance claim settlement proceeds in the second quarter of 2016 related to the South Carolina Flood of which the remaining $4.5 million was recorded in cost of sales. 5 - INCOME TAXES The calculation of the Company s effective tax rate is as follows: Three months ended Six months ended 2017 2016 2017 2016 Income tax expense $3,975 $5,605 $8,887 $8,621 Earnings before income tax expense $14,048 $19,263 $32,393 $31,809 Effective tax rate 28.3% 29.1% 27.4% 27.1% 11

6 - RESTRICTED CASH Cash is considered restricted when it is subject to restrictions that prevent its use for current purposes. The Company s restricted cash consists of $71.8 million transferred into a third-party trust account as part of the Company s acquisition of substantially all the assets of Canadian Technical Tape Ltd. which closed on July 1, 2017. The $71.8 million was released from the third-party trust account following the closing on July 1, 2017. Refer to Note 12 for more information. 7 - PROPERTY, PLANT AND EQUIPMENT Capital expenditures totaled $20.4 million and $42.5 million in the three and six months ended 2017, respectively, and $13.8 million and $23.3 million in the three and six months ended 2016, respectively. Capital expenditures incurred in the first six months of 2017 were primarily to support the water-activated tape capacity expansion at the Midland, North Carolina manufacturing facility ( WAT Project ) and other growth initiatives and maintenance needs. Capital expenditures incurred in the first six months of 2016 primarily related to the shrink film capacity expansion at the Portugal manufacturing facility, the relocation and modernization of the Company s Columbia, South Carolina manufacturing operation, the WAT Project and other growth initiatives and maintenance needs. The following table summarizes the net book value of property, plant and equipment: December 31, 2017 2016 $ $ Land 6,122 5,521 Buildings 31,356 31,873 Manufacturing equipment 147,099 145,393 Computer equipment and software 5,810 6,183 Furniture, office equipment and other 609 601 Construction in progress 67,254 43,907 258,250 233,478 The following table summarizes information related to commitments to purchase machinery and equipment: December 31, 2017 2016 $ $ Commitments to purchase machinery and equipment 30,351 32,375 12

8 - BORROWINGS On June 9, 2017, the Company amended its $300.0 million revolving credit facility with a syndicate of financial institutions ( Revolving Credit Facility ) to increase its borrowing limit by $150.0 million, bringing the Revolving Credit Facility credit limit to $450.0 million. The amended credit agreement continues to include an incremental accordion feature of $150.0 million, enabling the Company to further increase the credit limit of the Revolving Credit Facility if needed, subject to the credit agreement's existing terms and lender approval. In securing the amendment, the Company incurred debt issue costs amounting to $0.5 million which were capitalized and are being amortized using the straight-line method over the remaining life of the Revolving Credit Facility. As of 2017, the Company had drawn a total of $281.5 million against the Revolving Credit Facility, which consisted of $274.7 million of borrowings and $6.8 million of standby letters of credit. Borrowings are comprised of the following: December 31, 2017 2016 $ $ Revolving Credit Facility (1) 272,993 159,608 Finance lease liabilities 11,400 14,265 Forgivable government loan 4,358 3,276 Mortgage and other loans 5,138 2,676 293,889 179,825 Less: current borrowings 9,253 7,604 284,636 172,221 (1) The Revolving Credit Facility is presented net of unamortized related debt issue costs, amounting to $1.8 million and $1.4 million as of 2017 and December 31, 2016, respectively. 9 - CAPITAL STOCK AND EARNINGS PER SHARE Common Shares The Company s common shares outstanding as of 2017 and December 31, 2016 were 59,287,210 and 59,060,335, respectively. Dividends The cash dividends paid during the period were as follows: Declared Date Paid date Per common share amount Shareholder record date Common shares issued and outstanding Aggregate payment (1) March 8, 2017 March 31, 2017 $0.14 March 21, 2017 59,110,335 $8,316 May 8, 2017 2017 $0.14 June 15, 2017 59,169,710 $8,365 (1) The Aggregate dividend payment amount presented in the table above has been adjusted for the impact of foreign exchange rates on cash payments to shareholders. Share Repurchases Under the Company s normal course issuer bid ( NCIB ), it has the ability to repurchase for cancellation up to 4,000,000 of the Company s common shares. As of 2017, 4,000,000 shares remained available for repurchase under the NCIB. For the six months ended 2016, the Company repurchased 147,200 shares at an average purchase price of CDN$15.77, resulting in a total purchase price of $1.7 million. The excess of the purchase price paid 13

over the carrying value of the common shares repurchased is recorded in deficit in the consolidated balance sheet and in the statement of consolidated changes in equity. The NCIB which expired on July 13, 2017 was renewed for a twelve-month period starting July 17, 2017. Earnings Per Share The weighted average number of common shares outstanding is as follows: Three months ended Six months ended 2017 2016 2017 2016 Basic 59,153,920 58,657,691 59,144,024 58,656,679 Effect of stock options 403,523 845,296 399,307 799,511 Effect of performance share units - 1,331,406 289,820 1,071,339 Diluted 59,557,443 60,834,393 59,833,151 60,527,529 There were no stock options that were anti-dilutive and excluded from the diluted earnings per share calculations for the periods ended 2017 and 2016. The effect of performance share units ( PSUs ) included in the calculation of weighted average diluted shares outstanding includes the following: Three months ended Six months ended 2017 2016 2017 2016 PSUs which met the performance criteria (1) - 887,604 885,718 887,604 (1) See section entitled Performance Share Unit Plan for additional information. Stock Options The following tables summarize information related to stock options: Three months ended Six months ended 2017 2016 2017 2016 Stock options exercised 161,875 60,200 226,875 82,500 Weighted average exercise price CDN$10.33 CDN$7.80 CDN$8.00 CDN$7.54 Cash proceeds $1,256 $363 $1,362 $478 2017 Stock options outstanding 834,375 Weighted average exercise price per stock option outstanding CDN$12.29 Weighted average fair value at grant date per stock option outstanding $3.43 Performance Share Unit Plan On February 17, 2017, the Board of Directors approved an amendment to the PSU Plan to provide for only cash settlement of PSU awards. As a result of the amendment, the Company remeasured the fair value of the PSU awards on the amendment date and will continue to do so prospectively at each reporting period end date and at settlement. There was no incremental fair value granted as a result of these modifications. The fair value of the PSUs is based on the Monte Carlo valuation model at each reporting period end date multiplied by the percentage vested. As a result, the amount of expense recognized can vary due to changes in the model variables from period to period until the PSUs are 14

settled, expire or are otherwise cancelled. The corresponding liability is recorded on the Company s consolidated balance sheet under the caption share-based compensation liabilities, current for amounts expected to settle in the next twelve months and share-based compensation liabilities, non-current for amounts expected to settle in more than twelve months. The PSUs are earned over a three-year period with vesting at the third anniversary of the grant date unless vesting is accelerated based on retirement eligibility, death or disability. The number of PSUs earned can range from 0% to 150% of the grant amount based on the total shareholder return ( TSR ) ranking versus a specified peer group of companies. Based on the Company's TSR ranking as of June 30, 2017, the number of PSUs earned if all of the outstanding awards were to be settled at 2017, would be as follows: Grant Date March 13, 2015 Performance 150% May 14, 2015 100% May 20, 2015 100% March 21, 2016 100% December 20, 2016 0% March 20, 2017 150% The following table summarizes information about PSUs during the period: 2017 2016 2017 2016 PSUs granted - - 358,377 392,572 Weighted average fair value per PSU granted - - $16.15 $13.52 PSUs forfeited/cancelled - 3,008 6,198 3,008 PSUs settled (1) 139,200-139,200 - Weighted average fair value per PSU settled $27.74 - $27.74 - Expense recorded in earnings in selling, general and administrative expenses ("SG&A") $2,922 $1,453 $4,201 $2,255 Cash settlements $4,174 - $4,174-15 Three months ended Six months ended (1) On June 15, 2017, the Board of Directors approved the settlement of PSUs granted in 2014, which had been earned and vested in accordance with the PSU plan. The PSU settlement occurred on June 22, 2017. The cash payment at settlement was calculated based on the number of settled PSUs held by the participant, multiplied by the volume weighted average trading price ( VWAP ) (CDN$24.60) of the Company s common shares on the TSX for the five consecutive trading days immediately preceding the day of settlement. The number of PSUs earned was 150% of the grant amount based on the TSR ranking versus a specified peer group of companies as of June 11, 2017. The weighted average fair value of PSUs granted was estimated based on a Monte Carlo simulation model, considering the following weighted average assumptions: Six months ended 2017 2016 Expected life 3 years 3 years Expected volatility (1) 34% 36% Risk-free interest rate 1.57% 1.05% Expected dividends (2) 0.00% 0.00% Performance period starting price (3) CDN$22.26 CDN$18.49 Closing stock price on TSX as of the estimation date CDN$21.94 CDN$18.44 (1) Expected volatility was calculated based on the daily dividend adjusted closing price change on the TSX for a term commensurate with the expected life of the grant. (2) A participant will receive a cash payment from the Company upon PSU settlement that is equivalent to the number of settled PSUs multiplied by the amount of cash dividends per share declared by the Company between the date of grant and the settlement date. As such, there is no impact from expected future dividends in the Monte Carlo simulation model.

(3) The performance period starting price is measured as the VWAP for the common shares of the Company on the TSX on the grant date. The following table summarizes information about PSUs outstanding as of: 2017 PSUs outstanding 1,105,056 Weighted average fair value per PSU outstanding $20.57 Outstanding amounts recorded in the consolidated balance sheets in share-based compensation liabilities, current $6,532 Outstanding amounts recorded in the consolidated balance sheets in share-based compensation liabilities, long-term $4,855 Deferred Share Unit Plan On February 17, 2017, the Board of Directors approved an amendment to the Deferred Share Unit ( DSU ) Plan to provide for only cash settlement of DSU awards. As a result of the amendment, the Company remeasured the fair value of the DSU awards on the amendment date and will continue to do so prospectively at each reporting period end date and at settlement. There was no incremental fair value granted as a result of these modifications. The fair value of DSUs is based on the five trading days VWAP of the Company s common shares on the TSX at the end of each reporting period. As a result, the amount of expense recognized can vary due to changes in the stock price from period to period until the DSUs are settled, expire, or are otherwise cancelled. The corresponding liability is recorded on the Company s consolidated balance sheet under the caption share-based compensation liabilities, current. The following tables summarize information related to DSUs: Three months ended Six months ended 2017 2016 2017 2016 DSUs granted 32,280-40,242 11,714 Weighted average fair value per DSU granted $18.58 - $18.30 $14.29 Expense recorded in earnings in SG&A (1) $813 $57 $834 $117 2017 DSUs outstanding 159,490 Weighted average fair value per DSU outstanding $18.95 Outstanding amounts recorded in the consolidated balance sheets in share-based compensation liabilities, current (1) $3,147 (1) Includes effect of DSUs received in lieu of cash for directors fees not yet granted. 16

Stock Appreciation Rights The following tables summarize information regarding stock appreciation rights ( SARs ): Three months ended Six months ended 2017 2016 2017 2016 SARs exercised - 6,250 13,250 147,727 Base price CDN$7.56 CDN$7.56 CDN$7.56 CDN$7.56 Expense recorded in earnings in SG&A $194 $910 $7 $1,446 Cash payments on exercise, including awards exercised but not yet paid - $66 $155 $1,264 2017 SARs outstanding 147,500 Aggregate intrinsic value of outstanding vested awards $1,943 Outstanding amounts vested recorded in the consolidated balance sheets in share-based compensation liabilities, current $1,870 10 - INVESTMENT IN NEWLY-FORMED ENTERPRISE On June 23, 2017, the Company, under a Share Subscription and Shareholder Agreement, purchased 99.7% of the issued and outstanding shares in Capstone Polyweave Private Limited (doing business as Capstone ), a newly-formed enterprise in India ( Capstone Investment ). The principal purpose of the Capstone Investment will be to further extend the Company s woven products business through a global supply of woven products. The Company invested $5.1 million in cash, funded primarily from the Company s Revolving Credit Facility. The balance sheet of Capstone subsequent to the investment is as follows: June 23, 2017 $ Current assets Cash 5,066 Other assets 578 Current liabilities Accounts payable and accrued liabilities 20 Borrowings, current 559 579 5,644 5,065 June 23, 2017 $ Consideration paid for investment 5,050 Plus: remaining non-controlling interest 15 Fair value of net assets 5,065 17

The Company will be partnering with the non-controlling shareholders of Capstone, who are also the shareholders and operators of Airtrax Polymers Private Limited (d/b/a Airtrax ). Airtrax manufactures and sells woven products that are used in various applications, including in the building and construction industry. The Company has agreed to maintain a minimum 55% interest in Capstone for total cash consideration to be provided of approximately $13 million, which is expected to be financed with funds from the Revolving Credit Facility. The shareholders of Airtrax have agreed to arrange a contribution in kind to Capstone of the net assets attributed to Airtrax s existing woven product manufacturing operations, which are estimated to have a value of approximately $12 million. The payments from the Company will be made in several tranches over a period of approximately six to twelve months from June 23, 2017, with the Airtrax net asset contribution to be made at the end of that period. The advisory fees and other costs associated with establishing the newly-formed enterprise of $0.7 million and $1.0 million for the three and six months ended 2017, respectively, are included in the Company s consolidated earnings in SG&A. 11 - FINANCIAL INSTRUMENTS The Company is exposed to a risk of change in cash flows due to the fluctuations in interest rates applicable on its variable rate Revolving Credit Facility and other floating rate borrowings. To minimize the long-term cost of floating rate borrowings, the Company entered into interest rate swap agreements that are designated as cash flow hedges. The terms of the interest rate swap agreements are as follows: Notional Fixed interest Effective Date Maturity amount Settlement rate paid March 18, 2015 November 18, 2019 $40,000 Monthly 1.610% August 18, 2015 August 20, 2018 $60,000 Monthly 1.197% June 8, 2017 June 20, 2022 $40,000 Monthly 1.790% August 20, 2018 August 18, 2023 $60,000 Monthly 2.045% As of 2017, the carrying amount and fair value of the interest rate swap agreements was an asset included in other assets in the consolidated balance sheet, amounting to $0.2 million. As of December 31, 2016, the carrying amount and fair value was a liability included in other liabilities in the consolidated balance sheet amounting to $0.2 million. The following table summarizes information regarding the change in fair value of the interest rate swap agreements: Three months ended Six months ended 2017 2016 2017 2016 Increase (decrease) in fair value of the derivatives used for calculating hedge effectiveness $140 ($331) $440 ($1,634) Classification and Fair Value of Financial Instruments The carrying amount of the financial assets and liabilities classified as measured at amortized cost is considered a reasonable approximation of fair value. The Company categorizes long-term borrowings and interest rate swaps as Level 2 of the fair value hierarchy. The Company measures the fair value of its interest rate swap agreements using discounted cash flows. Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of a reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties. 18

The Company categorizes its non-controlling interest put options in Powerband (1) as Level 3 of the fair value hierarchy. The Company measures the fair value of its non-controlling interest put options in Powerband by estimating the present value of future net cash inflows from earnings associated with the proportionate shares that are subject to sale to the Company pursuant to an exercise event. This estimation is intended to approximate the redemption value of the options as indicated in the shareholders agreement. The calculation is made using significant unobservable inputs including estimations of undiscounted annual future cash inflows ranging between $4.5 million and $7.5 million, and a discount rate of 12.7%, which the Company believed to be commensurate with the risks inherent in the ownership interest. The fair value of the liability is sensitive to changes in projected earnings and thereby, future cash inflows, and the discount rate applied to those future cash inflows, which could result in a higher or lower fair value measurement. On July 4, 2017, the Company and the minority shareholders of Powerband executed a binding term sheet that confirmed that the Company s call option on the minority shares had been triggered to purchase the 26% shareholding interest currently held by the minority shareholders in Powerband. As a result, a valuation is required as of the July 4, 2017 execution date. The valuation has not yet been completed as of the Financial Statement date of authorization. The fair value of the liability is sensitive to changes in projected earnings and thereby, future cash inflows, and the discount rate applied to those future cash inflows; therefore, the updated valuation could result in a higher or lower fair value measurement. The reconciliation of the carrying amount of the non-controlling interest put options resulting from the Powerband Acquisition (1) classified within Level 3 is as follows: Level 3 $ Balance as of December 31, 2016 10,020 Net foreign exchange differences 499 Balance as of 2017 10,519 (1) Powerband Acquisition refers to the acquisition by the Company of 74% of Powerband Industries Private Limited (doing business as Powerband ) on September 16, 2016. 12- POST REPORTING EVENTS Non-Adjusting Events On July 1, 2017, the Company acquired substantially all of the assets of Canadian Technical Tape Ltd. (doing business as Cantech ), a privately-owned North American supplier of industrial and specialty tapes based in Montreal, Quebec for an aggregate purchase price of approximately $67 million, net of cash acquired of $4.8 million and subject to a post-closing working capital adjustment ( Cantech Acquisition ). The purchase price was financed with funds available under the Revolving Credit Facility. The former shareholders of Cantech have in escrow $10.2 million related to customary representations, warranties and covenants in the Cantech purchase agreement which contains customary indemnification provisions. The Cantech Acquisition is expected to further enhance and extend the Company s product offering, and provide additional distribution channels for the Company s products in Canada, the US, and Europe. The Cantech Acquisition will be accounted for using the acquisition method of accounting. The Company expects a significant portion of the acquisition purchase price to be assigned to goodwill and intangible assets. The Company expects a significant portion of the goodwill to be deductible for income tax purposes. Management is not yet able to provide a breakout of the purchase price allocation due to the timing of the acquisition and the post-closing working capital adjustment. On July 4, 2017, the Company and the minority shareholders of Powerband executed a binding term sheet that confirmed that the Company s call option had been triggered to purchase the 26% shareholding interest currently held by the minority shareholders of Powerband. As of August 10, 19

2017, no shares have been purchased by the Company under this agreement as the parties continue to work through the exit provisions stipulated in the term sheet. On August 8, 2017, the Company acquired 3,250,000 additional shares of Capstone for a purchase price of $5.1 million. The purchase price was financed with funds available under the Revolving Credit Facility. The NCIB which expired on July 13, 2017 was renewed for a twelve-month period starting July 17, 2017. Under the renewed NCIB, the Company may repurchase for cancellation up to 4,000,000 common shares. As of August 10, 2017, no shares have been repurchased under the renewed NCIB. On August 10, 2017, the Company declared a quarterly cash dividend of $0.14 per common share payable on September 29, 2017 to shareholders of record at the close of business on September 15, 2017. The estimated amount of this dividend payment is $8.3 million based on 59,287,210 of the Company s common shares issued and outstanding as of August 10, 2017. Effective July 21, 2017 the Company entered into an interest rate swap agreement that is designated as a cash flow hedge to minimize the long-term cost of borrowings priced at the 30- day Canadian Dollar Offering Rate. The terms of the interest rate swap agreements are as follows: Notional Fixed interest Effective Date Maturity amount Settlement rate paid July 21, 2017 July 18, 2022 CDN$90,000 Monthly 1.154% The notional amount will decrease by CDN$18.0 million on the 18 th of July of every year until settlement. No other significant adjusting or non-adjusting events have occurred between the reporting date of these Financial Statements and the date of authorization. 20

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