Revenue: Nearly $200 million for the second quarter.
EBITDA Equivalent Cash Flow: Approximately $131 million for the quarter.
Net Income: Around $21 million or $0.16 per share for the quarter.
Dividend: $0.27 per share, approximately 9% dividend yield.
Fixed Rate Backlog: Approximately $4.9 billion.
Operating Days: 6,400 operating days in Q2.
Fleet Utilization: 97.6% overall utilization in Q2.
Charter Revenue: $199 million in Q2, with $90 million from container fleet.
Profit Share Contribution: $4.3 million in Q2.
Cash and Cash Equivalents: Approximately $186 million at quarter end.
Adjusted EBITDA: Approximately $131 million compared to $152 million in the previous quarter.
Book Equity Ratio: Approximately 27% based on Q2 numbers.
Release Date: August 14, 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 82nd consecutive dividend, highlighting its commitment to returning value to shareholders.
The company reported nearly $200 million in revenues for the second quarter, with an EBITDA equivalent cash flow of approximately $131 million.
SFL Corp Ltd (NYSE:SFL) has a fixed rate backlog of approximately $4.9 billion, concentrated around long-term charters with strong end users.
The company has transformed its operating model over the last 10 years, making it relevant for large end users like Maersk and Volkswagen Group.
SFL Corp Ltd (NYSE:SFL) raised $100 million in a public offering to fuel further growth and build long-term distributable cash flow per share.
Negative Points
Charter revenues from drilling rigs were lower due to US GAAP accounting rules and the mobilization of the Hercules rig.
The Linus rig was out of service for most of the quarter due to a scheduled periodic survey, impacting revenues.
The company's net income for the quarter was $21 million, or $0.16 per share, which is lower compared to the previous quarter.
SFL Corp Ltd (NYSE:SFL) faces challenging prospects for recovery of a $27.4 million judgment against Allseas due to the guarantor's administration status.
Operating and G&A expenses for the quarter were approximately $70 million, reflecting deferred operating costs and impacting overall profitability.
Q & A Highlights
Q: Are operators showing more interest in the Hercules rig given recent consolidation in the offshore space, or are they still focused on their own backlogs? A: Ole Hjertaker, CEO: The Hercules rig is currently working in Canada for Equinor and has performed well, including a significant find in Namibia for Galp. While there is a decent market for rigs of this caliber, no follow-on work has been concluded yet. The rig is expected to come off charter in the fourth quarter, depending on Equinor's drilling efficiency and scope of work. We are in discussions with various oil companies but cannot provide specific details until a new charter is in place. Recent M&A activity has focused more on drill ships rather than semi-submersibles like the Hercules. Charter rates are increasing, particularly for ultra-deepwater units, and we remain optimistic about the long-term prospects in this segment.
Q: What is the status of the Hercules rig's current contract and future prospects? A: Ole Hjertaker, CEO: The Hercules is currently under contract with Equinor in Canada and is performing well. The rig is expected to complete its current charter in the fourth quarter, depending on Equinor's requirements. We are actively engaging with potential charters but have not finalized any agreements yet. The market for such rigs remains promising, with charter rates on the rise.
Q: How has the recent consolidation in the offshore space affected the market for rigs like Hercules? A: Ole Hjertaker, CEO: The consolidation has primarily focused on listed companies and drill ships, not semi-submersibles like Hercules. However, we are monitoring the situation closely. Charter rates for ultra-deepwater units have been strong, and we believe in the long-term potential of this segment.
Q: Can you provide more details on the financial performance and future outlook for SFL? A: Aksel Olesen, CFO: SFL reported revenues of nearly $200 million for the second quarter, with an EBITDA equivalent cash flow of approximately $131 million. The net income was around $21 million or $0.16 per share. Our fixed rate backlog is approximately $4.9 billion, concentrated around long-term charters with strong end users. We continue to build our asset portfolio and have raised $100 million in a public offering to support further growth.
Q: What are the key factors contributing to SFL's financial performance in the second quarter? A: Aksel Olesen, CFO: The second quarter saw significant contributions from our container fleet, car carriers, and tankers. Profit share arrangements, particularly related to fuel savings, also added to cash flow. However, revenues from our energy assets were lower due to deferred mobilization fees and costs under US GAAP accounting rules. We expect higher revenues in the third quarter as these deferred amounts are recognized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.