• Revenue: Over $260 million for the third quarter.
• EBITDA Equivalent Cash Flow: Approximately $167 million for the quarter.
• Net Income: Around $45 million or $0.34 per share for the quarter.
• Fixed Rate Backlog: Approximately $4.7 billion.
• Quarterly Dividend: $0.27 per share, around 10% dividend yield.
• Gross Charter Hire: Approximately $263 million during the third quarter.
• Operating and G&A Expenses: Approximately $99 million for the quarter.
• Cash and Cash Equivalents: Approximately $164 million.
• Adjusted EBITDA: Approximately $167 million for the quarter.
• Book Equity Ratio: Approximately 28%.

• Warning! GuruFocus has detected 6 Warning Signs with SFL.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SFL Corp Ltd (NYSE:SFL) announced its 83rd consecutive dividend, maintaining a strong commitment to returning value to shareholders with a 10% dividend yield.
• The company reported revenues of over $260 million for the third quarter, with an EBITDA equivalent cash flow of approximately $167 million, showing significant growth from the previous quarter.
• SFL Corp Ltd (NYSE:SFL) has a fixed rate backlog of approximately $4.7 billion, with two-thirds of this from investment-grade customers, providing strong cash flow visibility.
• The company has successfully renewed and extended multiple existing charters and ordered five large container vessels with 10-year time charters, adding $1.2 billion in backlog.
• SFL Corp Ltd (NYSE:SFL) has effectively addressed short-term debt maturities by raising a new unsecured bond loan and refinancing existing debt, demonstrating strong financial management.

Negative Points

• The company faced approximately $5.6 million in negative non-cash mark-to-market and one-off items during the quarter.
• Operating costs increased significantly due to new vessel deliveries, scheduled dry dockings, and the Hercules rig being back on contract.
• The Hercules drilling rig's revenue and costs are subject to US GAAP accounting rules, which can lead to fluctuations in reported financials.
• SFL Corp Ltd (NYSE:SFL) has some legacy assets from previous sale and leaseback transactions, which may not align with its current long-term charter strategy.
• The company has older container vessels approaching 20 years, which may need to be sold or rechartered, potentially impacting future revenue.

Q & A Highlights

Q: Historically, some container ships have done sale and leasebacks to help with fleet management. Do you expect that to happen this year? And is that something that could be an opportunity for SFL? A: Ole Hjertaker, CEO: We have a significant number of container ships in our fleet and have moved away from high-leverage sale and leasebacks. Recent investments have been long-term time charters, which have worked well. We remain open to opportunities in this segment and others we focus on.

Q: With the Hercules mobilizing to Norway, how do contracting prospects there shape up versus Canada or Namibia? A: Ole Hjertaker, CEO: The rig has been moved to Norway due to its efficient location. We are looking for opportunities in the North Sea and West Africa. While Canada may not present immediate opportunities, we expect it to be viable again by late next year or 2026.

Q: Do you expect to recognize any revenue in Q4 from the contract with Echinacea in Canada? A: Ole Hjertaker, CEO: Yes, the rig worked until the end of October, covering two out of three months in Q4. We will adjust expenses accordingly, ensuring a decent contribution from the rig this quarter.

Q: Should the asset remain open throughout part of 2025, could you provide some commentary on the expenses you would expect on a daily basis? A: Ole Hjertaker, CEO: When operational, expenses are around $200,000 per day. Between contracts, we can reduce costs significantly, potentially to $75,000-$100,000 per day, depending on equipment readiness.

Q: You've sold a 2005 built container vessel. What are your plans for the other older container vessels in the fleet? A: Ole Hjertaker, CEO: We typically sell vessels approaching 20 years old. We have other older vessels, like the 74,100 container ships with MSC, which have purchase obligations next year. We will assess options for a sister vessel coming off charter soon, potentially rechartering or selling it.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.