Knot Offshore Partners LP Q3 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Gary, the prognostications that you give are very positive for what's going on and it's going to be a long time before oil is not necessary and this carbon footprint issue ends. So I know we have a long life ahead of us as a company. Your performance has been very good. You've more than met the distribution, although this time, it's lower, it's 1.03. The long-term debt that I looked at has gone down on the current portion of long-term debt. But the -- and the total current liabilities have gone down significantly. The equity has gone down a little bit, and the total assets have gone down a little bit. But in your perspective, as you see our stock traded, the units traded, why do you think the market gives us a price on our units that yields 11% plus when you have done steady $0.52 for years now? You've been a good, steady company. What do you in your minds see as why the market puts such a high interest rate price on our units?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : So you don't see anything in our structure as a business that warrants this view of weakness that makes the dividend reflective of a very high risk? You don't see anything in our business structure or future that portrays why the risk should be so high?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : How do you view -- yes, I've enjoyed the dividend for years now. And although my original company, when we purchased the shares, our average price was around $20, and we've taken opportunity to add to positions, which has brought it down. But the 4 or 5 years that we've enjoyed the $0.52 a quarter has sure paid off for us. How do you visualize the company in the next couple of years, changing around the idea of the long-term assets falling and rather stabilizing or increasing?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Okay. In this last reporting period from December 31, 2020 to September 30, 2021, our long-term assets have gone down about $100 million round numbers from $1.7 billion to $1.6 billion. How do you visualize stabilizing that or turning it around and have the long-term assets begin to climb?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : All right. Well, I guess that's -- I don't know the question, but it slipped. I guess I'm concerned that we're just somebody who is really just benefiting the bankers and that I want to see us be stable for the next 10 years. And do you feel that that's a reality and that the business can continue to stay stable, perhaps grow a little bit. I don't necessarily need growth for our objectives. I need stability. And you have met the payout. Do you see any -- your ratio has been over 1 for a long time. Do you see any possibility of increasing the dividend over time because of the nature of our business and the profitability? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2021 / 4:00PM, KNOP.N - Q3 2021 Knot Offshore Partners LP Earnings Call

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Do you see any possibility in the next year to 2 of not just amortizing debt but accelerating debt reduction, which, of course, yields us more free cash flow on operations?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Can you give me some better understanding color, as they say, on the ATM, which kind of took me by surprise that you started selling units to raise capital. Do you anticipate doing more of that during this next year? And if so, why?

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Build some cash? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2021 / 4:00PM, KNOP.N - Q3 2021 Knot Offshore Partners LP Earnings Call

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : I was saying build some cash.

Question: Robert Silvera - R.E. Silvera & Associates Marine Surveyors & Consultants, Inc. - Analyst : Right. Every time issue -- units are issued, then the dividend payout increases incrementally. Okay, Gary. I like your conservative approach, and I like your steadiness.