SFL Corp (NYSE: SFL) saw its stock price plummet 13.75% in Tuesday's pre-market trading session following the release of its second-quarter 2025 financial results. The sharp decline comes despite the company beating analyst expectations for earnings, as investors reacted negatively to a significant cut in the quarterly dividend and other operational challenges.

SFL reported a net income of $1.5 million, or $0.01 per share, surpassing the analyst consensus estimate of a $0.01 loss. The company's revenue for the quarter came in at $192.588 million, exceeding the projected $186.200 million. However, these positive results were overshadowed by several factors that concerned investors:

1. Dividend Cut: SFL announced a reduction in its quarterly dividend from $0.27 to $0.20 per share, citing the need to adjust to changes in cash flow. 2. Adjusted EBITDA Miss: The company's adjusted EBITDA of $104 million fell short of analyst estimates of $110.30 million. 3. Drilling Rig Challenges: SFL faces ongoing issues with its legacy drilling rig Hercules, as market uncertainty and oil price volatility have delayed new employment opportunities. 4. Fleet Renewal Impact: While the company has been actively renewing its fleet by selling older vessels, this strategy has increased available capital for new investments but reduced short-term cash flow generation. CEO Ole B. Hjertaker commented on the challenges, stating, "The market for our legacy drilling rig Hercules remains challenging, with the recent market uncertainty and oil price volatility delaying new employment opportunities for the rig. This is impacting our near-term financial results as we keep the rig warm stacked."