SFL Corp. Ltd. Q3 FY2024 earnings call

• Announced the 83rd dividend and continues to build a diversified maritime infrastructure fleet. - Reported revenues over $260 million, EBITDA equivalent cash flow of approximately $167 million in the quarter, net income around $45 million or $0.34 per share. - Fixed rate backlog stands at approximately $4.7 billion, two-thirds with investment-grade customers. - Busy with fleet renewal, having taken delivery of seven new vessels this year including four in the third quarter, and upgrading several vessels. - Raised an unsecured bond loan, refinanced debt, and addressed short-term asset debt maturities. - Paid a quarterly dividend of $0.27 per share with around 10% dividend yield.

In the third quarter, the container fleet generated approximately $89 million in gross charter hire, accounting for a significant portion of the total $263 million gross charter hire from the fleet. The car carrier fleet had approximately $26 million in gross charter hire. The tanker fleet saw gross charter hire rise to approximately $37 million from around $30 million in the previous quarter. The dry bulk vessels generated approximately $25 million in gross charter hire, including around $1.7 million in profit share from capesize vessels on long-term charters to Golden Ocean. The energy assets (drilling rigs) had contract revenue of approximately $70 million in the third quarter, with operating costs increasing due to full operations from early July and amortized mobilization costs.

• Fixed charter rate backlog of $4.7 billion provides strong cash flow visibility. - Recently raised $100 million in gross proceeds from U.S. public offering and over $1 billion in financing so far this year for refinancing and new acquisitions. - Expect pre-delivery and post-delivery loan facilities for newbuilding orders of five 16,800 teu container vessels.

• Conditions in the shipping, offshore and credit markets could cause actual results to differ materially from forward-looking statements. Uncertainties in these markets pose risks to operating results and financial condition.

Q: Historically, some container ships have done some sale and leasebacks to help with fleet management. Do you expect that to happen this year? And is that something that something that could be an opportunity for SFL?

A: Ole Hjertaker said they have a significant number of container ships in the fleet, have moved away from more financial sale leasebacks which are high levered, but would not mind doing more business in the segment as they look for opportunities in all focused sectors.

Q: Do you expect to recognize any revenue on Q4 from the contract with Equinor in Canada?

A: Ole Hjertaker said the rig has been working virtually to the end of October, so there will be a decent contribution from the rig in the fourth quarter as it was working for a full month and compensated for moving afterwards.

Q: Should the asset remain open throughout part of 2025, could you provide some commentary on the expenses you would expect maybe on a daily basis?

A: Ole Hjertaker said when the rig is working, operating expenses are around $200,000 per day, but in between contracts, operating expenses can be reduced to around $75,000 to $100,000 per day as they manage costs to get the rig ready for new contracts.

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 said they typically own vessels until they can't charter them longer term, plan to phase out older vessels like the 2005-built one and others approaching 20 years, and this will improve fuel efficiency as the remaining vessels are modern eco-design ones.