Wheaton Precious Metals Corp (WPM) 2012 Q2 法說會逐字稿

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Silver Wheaton's 2012 second-quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

(Operator Instructions)

I would like to remind everyone that this conference call is being recorded on Friday, August 10, at 11 AM Eastern Time. I will now turn the conference over to Mr. Brad Kopp, Senior Vice President of Investor Relations. Please go ahead.

Thanks, Tracy, and good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by; Randy Smallwood, Silver Wheaton's President and CEO; and Gary Brown, Senior Vice President and Chief Financial Officer. I would like to bring to your attention that some of the commentary on today's call may contain Forward-looking statements. There can be no assurance that Forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Please refer to the section entitled Description of the Business Risk Factors in Silver Wheaton's annual information form, which is available on SEDAR and in Silver Wheaton's Form 40-F on file with the US Securities and Exchange Commission. The annual information form sets out the material risk factors that could cause actual results to differ, including the absence of control over mining operations, from which Silver Wheaton purchases silver and gold, with risks related to such mining operations and the risk of a decline in silver and gold prices. Lastly, it should be noted that all figures referred to on today's call are in US dollars unless otherwise noted.

Now, I would like to turn the call over to Randy, our President and CEO.

Thank you, Brad, and good morning, ladies and gentlemen. Thank you for dialing into our second-quarter 2012 conference call. We are very pleased to report that another strong quarter puts us on track for our best year ever. Solid performance from our portfolio of mines, combined with a reduction in concentrate produced but not yet delivered, has resulted in record silver sales and revenues for the second quarter in a row. Operating cash flows also reached a record high, and yesterday we announced our third quarterly dividend for 2012, which increased to $0.10 per share due to the increased cash flows.

As announced earlier in this week, the addition of two new streams from Hudbay Minerals subsequent to the quarter, will build on our already industry leading growth profile. The first stream is a precious metal stream with both gold and silver from Hudbay's currently producing flagship mine, the 777. The second stream is a silver stream on their key growth project Constancia, down in Peru. Similar to all of our agreements, this transaction once again highlights the effectiveness of our business model, which provides healthy capital to our operating partners while combining the certainty of fixed capital and operating costs with production from high quality mines that offer exciting upside potential. These new Hudbay streams deliver immediate cash flow, with 777 contributing an average annual production of approximately 4.2 million silver equivalent ounces until the end of 2016.

Our 2012 production guidance has been increased from 27 million to 28 million silver equivalent ounces. Once Constancia reaches full operations, silver equivalent production levels from these two assets will increase to about 4.9 million silver equivalent ounces, resulting in 2016 production guidance of 48 million ounces, a 90% increase over our 2011 production levels. And importantly, we have added these assets into our portfolio by using existing cash on hand, allowing us to maintain our exceptionally strong balance sheet and to continue to pursue even further growth through new value enhancing acquisitions.

In the second quarter of 2012, we achieved production of 6.7 million silver equivalent ounces. Silver equivalent sales reached an all-time high of 6.9 million ounces. This strong quarter resulted in record financial results, including revenues of over $200 million and operating cash flows in excess of $170 million, which represents a cash operating margin of 86%. More detail on the financials will be provided shortly by our Senior Vice President and Chief Financial Officer, Gary Brown.

On the operations front, production from most of our assets was very solid, with Zinkgruvan once again delivering a strong quarter, and sales of concentrate produced but not delivered from the Yauliyacu contributing considerably to our revenues and cash flow. While we did see some temporary short falls in production at the Penasquito mine and a delay announced at Pascua-Lama, we remain confident in our partners and view both of these assets as core streams which solidify our industry leading growth profile. Second-quarter mill throughput at Goldcorp's Penasquito was impacted by water shortages due to prolonged drought conditions in the region, resulting in a reduction of 2012 forecast silver production attributable to Silver Wheaton. Goldcorp is working to improve water supplies through additional wells and improvements in decanting of their tailings.

At Pascua-Lama, Barrick announced a one-year delay to the expected project startup and a substantial increase to its capital cost forecast. Silver Wheaton is not subject to these capital cost increases, but production is now slated to begin in mid-2014. Even with this delay, Pascua-Lama remains a world class project, and will be one of the best gold-silver mines in the world once it begins operations. With an average of 9 million ounces of silver per year delivered to Silver Wheaton over its first five years, and a 25-year mine life, Pascua-Lama remains an important part of our growth. In addition, Silver Wheaton will continue to receive silver from three of Barrick's other operations, to the extent Pascua-Lama is running below 75% of its designed capacity, or the end of 2013, whichever occurs later.

On the corporate development front, we remain focused on doing accretive deals for our shareholders. While considering new opportunities, we search for low-cost operations that can continue to produce through all phases of the commodity price cycle. We also focus on those opportunities that provide -- or sorry, those assets that provide opportunities for growth through exploration or expansion upside, as these are key to increasing value for the streams. We also want strong management teams as operating partners, with proven track records of delivering value to their own shareholders. The recent acquisition of the precious metal streams from Hudbay Minerals adheres to, if not exceeds, all of these principals, and is a perfect example of the types of assets that we target.

In the current market, access to traditional forms of financing, such as debt and equity, continue to remain challenging in most environments, but particularly this one. Streaming is a very value enhancing form of capital, which we believe has once again been validated with our recently announced partnership with Hudbay. Silver Wheaton has a very strong sheet, and we continue to focus on further growth, targeting high quality assets, from advanced exploration through to production. And with approximately $600 million in cash on hand after the Hudbay transaction and a fully undrawn $400 million revolving credit facility and strong future operating cash flows, we are exceptionally well positioned to continue growing our portfolio of precious metal streams. So in summary, 2012 is shaping up to be one of our strongest years yet, with record revenues and cash flow in Q2 coupled with the addition of two new metal streams to substantially grow and diversify Silver Wheaton. Our organic production growth profile, coupled with the addition of Hudbay's 777 and Constancia project, has put us on track to achieve silver equivalent production of 28 million ounces in 2012, and increasing to 48 million ounces by 2016. This represents one of the strongest growth profiles in the precious metals sector.

We remain focused on growth and will vigorously pursue additional opportunities in 2012 to further expand our portfolio of high quality, income generating assets. And with more than $1 billion in capacity, even after completing the Hudbay transaction, we still have one of the strongest balance sheets in the industry and are very well positioned to achieve our goals. Our business model ensures that we can guarantee margin delivery in a rising silver price environment. So with our current high quality portfolio and accretive growth potential, we firmly believe that we continue to offer the premier investment vehicle for silver and precious metals investors worldwide.

With that, I would like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, to provide a bit more detail on the financials. Gary?

Thank you, Randy, and good morning, ladies and gentlemen. Prior to reviewing Silver Wheaton's unaudited financial results for the three months ended June 30, 2012, I would like to remind everyone that all monetary figures discussed are denominated in US dollars unless otherwise noted. Silver Wheaton's second quarter of 2012 was very strong, marked by record setting silver equivalent sales volumes, revenue and operating cash flow. The Company's precious metal interests generated 6.7 million silver equivalent ounces of attributable production in the second quarter of 2012, consistent with the prior quarter and 10% above production levels from the comparable quarter of the prior year.

Payable silver equivalent ounces produced, but not yet delivered by our partners, decreased by approximately 1 million ounces over the quarter to 3.2 million ounces, primarily driven by the shipment of concentrate that was produced in prior quarters from Glencore's Yauliyacu mine. With the strong production levels, combined with the reduction in silver produced but not delivered, the Company realized record sales volumes of 6.9 million silver equivalent ounces, generating record revenue of $201 million. This was 3% higher than the revenue from the second quarter of 2011, with sales volumes rising by 36%, partially offset by sales prices being 24% lower. Earnings from operations for the second quarter of 2012 amounted to $152 million, compared with $159 million in 2011, with operating margins decreasing by 6%, to 76%. Cash-based G&A expenses were $5.7 million in the second quarter of 2012, with the increase from the comparable period of the prior year being primarily attributable to increased charitable donations. The Company continues to expect cash G&A expenses to be in the $23 million to $25 million range for 2012.

Net earnings amounted to $141 million in the second quarter of 2012, compared to $148 million in the prior year, with basic earnings per share decreasing to $0.40 per share from $0.42 per share in the prior year. Operating cash flow increased 3% from the prior year, to a record setting $173 million, or $0.49 per share, resulting in a dividend to be paid in Q3 2012 of $0.10 per share. This represents an 11% increase in the dividend per share declared for each of the last three quarters, and highlights one of the benefits of the new dividend policy introduced last year, whereby shareholders participate directly in the Company's strong organic growth profile. During the second quarter of 2012, value of the Company's long-term investment portfolio of shares and other publicly listed mining and mineral exploration companies decreased by $34 million, which has been reflected in the statement of our comprehensive income.

The operational highlights for the second quarter of 2012 included the following. San Dimas produced 1.2 million ounces of attributable silver in the second quarter of 2012, about 7% higher than production from the previous year, but 27% lower than the prior quarter due to the application of the sharing mechanism, whereby Primero retains 50% of payable silver production over and above an annual threshold, which is currently 3.5 million ounces, but rises to 6 million ounces starting August 6, 2014. Approximately 1 million ounces of silver was produced in excess of this threshold during the second quarter, of which Silver Wheaton received 50%. Given that the annual threshold associated with this -- annual period associated with this threshold runs from August 6 each year, a portion of Q3's production relating to San Dimas will also be shared.

Zinkgruvan produced 673.000 ounces of silver in the second quarter, 63% higher than was produced in the comparable quarter of the prior year, and representing an all-time record for this mine. This represents the second consecutive quarter of record silver production since the inception of the silver purchase contract in 2004, and is attributable to improving grades. This record level of production translated into the sale of 580,000 ounces of silver, 45% higher than volumes for the comparable period of the prior year. Although silver production related to Yauliyacu was down 10% in Q2 2012 relative to the comparable period of the prior year, sales volumes increased by 145%, to a record setting 1.2 million ounces, with such increase being attributable to the shipment of concentrates produced in prior periods. During the second quarter of 2012 the amount of payable silver contained in concentrates that has been produced at Yauliyacu but not yet delivered to Silver Wheaton decreased by approximately 900,000 ounces, leaving a balance of approximately 800,000 ounces as of June 30, 2012. Attributable silver production and sales relating to Penasquito was record setting 1.8 million ounces in the second quarter of 2012. This represented a 42 % increase in production and a 92% increase in sales from the prior year, with increased production being primarily attributable to the continued ramping up of the sulfide mill and improved recoveries resulting from more consistent mill operations, and increased sales being primarily production related but also augmented with the reduction of silver contained in concentrates produced in prior periods.

As of June 30, 2012, approximately 1.1 million ounces of payable silver had been produced at Penasquito but not yet delivered to Silver Wheaton. These positive variances were partially offset by silver production and sales from the Barrick mines in the second quarter of 2012, being about two-thirds the levels of the prior year, primarily attributable to the mining of lower grade material. During the second quarter of 2012, $2.4 million of interest was capitalized, with cost of the Barrick silver interest. Of this amount, $2.2 million relates to interest accreting on the discounted future payment due to Barrick, with the remainder being attributable to bank debt with a foreign average interest rate of just over 1%. As a reminder, the Company expects to capitalize all interest costs associated with currently outstanding obligations until the Pascua-Lama mine achieves commercial production.

Overall the Company's cash balances increased by $105 million in the second quarter of 2012, comprised of $173 million of cash generated from operations, offset primarily by $7 million of debt repayments and $64 million of dividend distributions. As of June 30, 2012, the Company had $1.1 billion of cash and cash equivalents on hand and $64 million of debt outstanding under the term loan facility. This cash balance, combined with the $400 million of available credit under the Company's revolving credit facility and strong future cash flows, positions the Company well to satisfy its funding commitments and sustain its dividend policy, while at the same time executing on its growth strategy. With respect to funding commitments, it is anticipated that $638 million of payments will be made in the third quarter of 2012, with $500 million relating to the initial upfront payment of the Hudbay transaction, and $138 million relating to final payment due to Barrick, relative to Pascua-Lama.

That concludes the financial summary. And with that, I turn the call back over to Randy.

Thank you, Gary. Operator, we would like to open up the call to questions.

Ladies and gentlemen, we will now conduct the question and answer session. (Operator Instructions) There will be a brief pause while we compile the Q&A roster. John Flanagan, Fundamental Equities.

Not being a Canadian mining person, this Hudbay stuff is new to us. Can you just briefly say -- describe the two projects?

Sure. 777 is located up here in Canada, it's on the border between Manitoba and Saskatchewan. It's in a district that's got a long history of mining, but the 777 itself started up in 2004. Hudbay has been around for 85 years mining history up in that region, but 777 started up in 2004. It's a VMS type underground mine that produces copper, lead and zinc concentrates, and will deliver to us about 4.2 million ounces of, that's silver equivalent ounces, with silver and gold. I think it's about 800,000 to 900,000 of silver per year and the rest of it comes in gold form.

Very profitable operation and good expiration potential when it started in 2004. It had 14 years of reserves -- reserve life in front of it and it's got about the same right now. It's pretty typical of these style of deposits where you keep on working your way along strike, down dip, and adjacent, and you have relatively good success with these. So it's a deposit model that we're very familiar with. We've got numerous other production from similar type geology that -- and we're quite happy with it.

Constancia is a second project, it's a copper porphyry project located down in Peru. It's a project that we've been following for a long time. Hudbay acquired it, I'm going to say, I can't remember the exact date of acquisition, but they've owned now for quite a few -- a couple of years, at least a couple years now. A pretty promising project, really good expiration success. They have found some porphyry mineralization that looks like it's got even better grades that main copper porphyry. So they've started moving this project forward. Their camp is under construction.

They've got a relatively strong social license, all their permits are in place to -- all the permits they need to move forward are in place. Strong community support, which is important in Peru. From our perspective, looks like they've done a very good job from that social side and that is very important in Peru, as we all know. And so it's expected to be up and running by -- should be by the end of 2014. And when it's up and running, it will increase our overall production to about 4.9 million silver equivalent ounces from these two assets.

Thanks, Randy.

Dan Rollins, RBC Capital markets.

Randy, just a quick question on the current inventories. Is 3.2 million ounces as steady-state level, just given the timing of production and sales with regards to concentrate, or do you expect to see that come down a little bit more?

It's probably not too far off, the one area -- as Penasquito, when it gets up to its full potential and they get the water resolved there, there is going to be -- it's a concentrate producer. It is typically the mines that produce concentrate where we have these inventory issues and these concentrate produced but not sold.

And so there may be a bit of upward pressure on that, but it is going to be a lumpy on a quarterly basis. In my experience, usually the fourth quarter is where they get flushed out and just to improve year-over-year results, and then first quarter they tend to build up again. So, that's about the only trend I can say with respect to the concentrates.

Okay, perfect. And just at Yauliyacu; so all the bulk concentrate is gone. Now, they can easily source the copper and lead concentrates, they're not having issues there any more, correct?

Yes, although we have -- there has been some press out recently that La Oroya, the smelter that they use to produce and deliver bulk concentrates to, it looks like it's going to be up and running again here, very quickly. They've made the environmental improvements and they're very close to getting that going forward.

We haven't got confirmation from Glencore but if that does comes on stream, the original bulk product -- bulk concentrate was ideally suited for shipping up to that La Oroya smelter. So if the La Oroya smelter comes on stream, it will definitely improve the economics for them, because it's -- I think it's about 100 kilometers up the road versus all the way down to tidal water and overseas somewhere, so stay tuned.

Okay. If that were to happen, would you see a significant change in the payable levels between the two separate cons versus the bulk con or would it be roughly the same?

It's roughly the same, it averages out to about the same.

Okay, great.

Michael Delgish, SAC Capital.

Question on the Revenue Canada audits. There was some disclosure in the release, but I was just wondering if you could expand on why you don't see any material impact? If it is just going back to what you have been saying all along or if there is any increased comfort from recent conversations with Revenue Canada? And if you could just provide an update on the status and timing for that to conclude?

There's really not much to update on that front. Revenue Canada continues to be in the information gathering stage. Again, this is a routine audit that's absolutely expected to occur on a regular basis for a company the size of Silver Wheaton. As far as timing goes, there's no commitment from Revenue Canada on when they would wrap this up, but we would be hopeful that they would wrap it up by the end of 2012.

Okay. Thank you.

Chris Lichtenheldt, UBS.

My questions, actually on inventory, were just answered. But to touch on, given the deal you found recently and presumably there's some other interesting things you're looking at, can you just comment on what your view is on your long-term investments, some of the strategic stakes you hold? Do you ever look at divesting, or are you still looking at further share acquisitions of that sort or are you really focused just on the streaming deals?

I call the equity investments almost a bit of an expiration department. It's a bit of a -- we -- those are small scale investments on the relative overall scale of the company itself, but we hope they bear fruit in terms of turning into streams. And so, Bear Creek, we've had great success -- or they've had great success in terms of advancing that into a very attractive project.

Being the largest shareholder gives us at least a seat at the table, in terms of discussions, about how they -- how the project goes forward. And so we do hope that those will bear fruit. They are definitely getting a lot closer than they have been in the past. And we still explore that side because there are -- it's quite advantageous to try and get in. There's a little bit more risk involved, but it's advantageous to try and get in at exciting early stage projects where there is -- where we can see some opportunities like this.

I think there has been some discussions about, perhaps, changing the structure of these investments and I can't really go into much more than that, although it would help us in terms of moving these things ultimately into streams, so all I can say is stay tuned.

Okay. That's great.

John Bridges, JPMorgan.

Congratulations on the results.

Thanks.

Just following on from Michael's question, is there any sort of sense as to what the maximum exposure could be coming from the Canadian audit?

We're not going to speculate on what position CRA may or may not take here. We are very comfortable with the structure that we have in place and believe that it will withstand scrutiny at the end of the day.

Okay. Congratulations on partnering up with Hudbay, I remember how Dave Garofalo was able to finance the Agnico growth without any serious upsets, so that's probably a good omen for Constancia.

I've been a long fan of David Garofalo, I think he's done a great job at Agnico and he's doing a great job at Hudbay.

Great. Just wondering, after spending that money on buying in there, what sort of minimum cash levels are you comfortable with within Silver Wheaton? Are you -- is the magazine empty now or -- and do you have to reload, or do you feel that you could still go off and buy other things?

We definitely have lots of capacity. We've got over a billion dollars in capacity right now. Our business model is -- and John, you know it as well as anyone, our objective is to get to zero. I don't like having cash on hand, I'd much rather have ounces in the ground, and so don't like having cash on the balance sheet. But at the same time we're not going to spend the cash foolishly.

We want to make sure that they're good quality acquisitions, and accretive, and add value to our shareholders all the way across the board. So patience and tempered, but the objective is to move all of that into the ground. And if we see quality acquisitions we won't even stop there, if it means we have to go out and finance to meet the demand, as long as the acquisitions are good we take -- we'll take on the growth.

Okay. Well, best of luck with your investments.

Thank you.

Andrew Kaip, BMO.

Just a follow-up question on future silver streams. I'm wondering with the acquisition that -- with the Hudbay acquisition this week, you're looking at about 10% of your future silver equivalent production. Is that the type of size that we should now expect from Silver Wheaton?

We look at assets that are bigger than that, we look at assets are smaller than that. Some of our best performing assets and best value back to our shareholders are down in the 1 million to 2 million ounce-a-year range. We don't have any problem adding on that side. To me, the diversifying and having a wide range is -- and it's sometimes when you sit and look at our individual production estimates from each mine, they -- you get misses and you get benefits out of them and they all sort of average out to the same.

So the more assets we bring in, I think it just diversifies our productions. I would say that the 4 million to 5 million ounces that is Hudbay brings to the table is probably middle of the range, in terms of what we look at. There are assets that are bigger out there and there's plenty of assets, of course, that are smaller out there. Again, it just comes down to the quality. We want to make sure whatever the size they have healthy operating margins.

Okay, thanks. And just one follow-up question regarding that. Can you comment at this point about the silver stream that is emerging from Xstrata's Hackett River project?

It's -- Xstrata is in with a very aggressive drilling campaign on Hackett River this year. It's -- if -- I believe it's actually a royalty versus a stream.

Yes.

That is fed back to Sabina, and so we have a Right of First Refusal on any silver out of the Sabina assets, on the Hackett River within Sabina, so we're watching and be -- and particularly paying attention in terms of the success that Xstrata has on that asset going forward. We would be happy to have a company like Xstrata in there, they have got a lot of experience up in that -- up to that climate. So we think that, in terms of having a company like that, in advancing that project, pretty excited about it.

Okay, thanks very much.

Steve Butler, Canaccord Genuity.

I wondered if it would take longer to watch paint dry or the audit to be done on the tax side, but do you have a sense -- (laughter) I just thought of that one on the cuff here, Randy. Do you have a sense of timing of conclusion of the CRA audit?

It's Federal Government (laughter).

Okay.

We're hopeful that, as Gary mentioned, we're hopeful that it's done by the end of 2012, but it's already taken quite a while to get to where we are right now.

Right. Randy, Gary, also noticed, of course it's just the way that the dividends fell from Q4 and -- or Q1 into Q2, if you will,. In other words, the dividends were almost a double quarter, if you will, in June, and you still generated $104 million of net cash increase. So, would you look at dividend policy again but only maybe after you do another blockbuster transaction? Or would you still evaluate the dividend increase before another, say, $50 billion deal, if you were doing one?

I think when it comes to dividends, it comes to how much cash do we have on hand. And we've always said our focus is growth, and so we never want to get to the point where if we've got the growth opportunities out there to continue expanding and add a value through accretive acquisitions, that's our principal focus.

If we're chewing up our cash flow feeding growth opportunities, then we're going to maintain the dividend policy as to where it is. If we start building up a decent size cash balance again, then we'll start working to push more onto the dividend side, onto the yield side. So you have to keep in mind that with the growth profile that we've got, where we're climbing with our current assets up to 48 million ounces a year, we have some pretty healthy cash flows coming.

Yes.

And so as those cash flows build up, it comes down to our ability to put it back into the ground. But if we can't put it back into the ground, then we start sharing it back. I think the best way to describe it is, as our Company grows and matures, you will see a shift as those cash flows keep on climbing, you will see a shift more towards the dividend side. But I would have to say that right now, we're very hopeful that we can put most of that money back into the ground and just maintain the dividend policy where it is, in the short-term.

Sure. And Gary, maybe a clarification for investors as much as myself, I think it's clarified, but of your $455 million of allocated purchase price to 777, that indeed will be accelerated tax shield use, right?

That's correct.

Yes, okay. Thanks very much.

John Flanagan, Fundamental Equities.

Does your volume coming from the current Barrick projects cover the shortfall that develops from the backup of one year in launch of the mine? And secondly, were you surprised by the degree of shortfall in capital cost increase?

You know, we've -- I'll answer the first one, the first question first. It's not a shortfall, it's a deferral. We're not losing silver. It's just a -- silver is being delayed. So on a year basis, yes, the first five years of Pascua-Lama will produce 9 million ounces per year delivered to Silver Wheaton, whereas the other operations feed us about 2.4 million, 2.5 million ounces, it fluctuates quite a bit on those other three assets.

And so, obviously it doesn't replace within the year, but we're not losing that 9 million ounces. It's just being deferred until the project gets up and running. So, I don't look at that as a shortfall, it's just a deferral. And was I surprised? The project itself is in a very challenging location. It's at high elevation in the Andes, but Barrick has a lot of experience building mines. They have got three other operations that they have built in similar environments in both Peru and Argentina.

So I don't think I could ask of a better partner, in terms of being able to move these projects forward, but what we've got is a worldwide situation here where capital costs, the inflation and especially in certain jurisdictions, such as Argentina, inflationary pressures have really, really hit the mining industry. And it's perhaps a good time to wave our flag.

It's one of the big advantages of Silver Wheaton, is that we are not subject to those inflationary pressures. Our contracts are all structured such that the cost risk isn't there, and so it just -- the CapEx increases at Pascua-Lama, it underscores how hard it is in the industry right now to get these mines up and running for reasonable capital costs. And at the same time, this asset is strong enough, it, as I said earlier on in the intro here, it's one of the best gold mines in the industry, and so we look forward to this one coming on stream and it will be on.

Having said that, Randy, you still would have a solid increase in total silver sales and shipments next year?

Next year, well, we'll have the benefit of 777 for an entire year, and Penasquito, we see continuing improvements there. Goldcorp is working towards expanding their well field capacity and improving the recovery of the water out of their tailings, the decanting of water out of their tailings. So as Penasquito comes on to full stream and as we get the benefit of 777 for a full year, yes, we will see growth next year.

Thanks a lot, Randy.

Thank you, John, and with that, operator, I'd like to thank everyone for dialing in. I look forward to speaking to everyone again soon. Thanks a lot.

This concludes this conference call for today. Thank you for participating. Please disconnect your lines.