SFL Corporation Q3 2024 Financial Results

In the third quarter of 2024, SFL Corporation (NYSE: NYSE:SFL) reported robust financial results with revenues surpassing $260 million and a net income of approximately $45 million, or $0.34 per share. The company declared its 83rd consecutive dividend of $0.27 per share, showcasing a strong 10% yield. The fixed-rate backlog was reported at around $4.7 billion, with a substantial portion coming from investment-grade customers. SFL's fleet expansion continues with the delivery of seven new vessels and the ordering of five large container vessels with 10-year charters.

Key Takeaways

• SFL Corporation's revenues exceeded $260 million, with EBITDA equivalent cash flow of about $167 million.
• Net income stood at around $45 million, or $0.34 per share, up from the prior quarter.
• The company declared its 83rd consecutive dividend of $0.27 per share, yielding approximately 10%.
• SFL has a fixed-rate backlog of approximately $4.7 billion, with a majority from investment-grade customers.
• The fleet expanded to 81 vessels, including seven new vessels and five large container vessel orders.
• Operating costs increased to about $32 million, mainly due to the full operational costs of the Hercules rig and new vessel deliveries.

Company Outlook

• SFL is focused on expanding its fleet with modern eco-designed vessels for delivery in 2028.
• The company is strategically phasing out older, less fuel-efficient container vessels to improve overall fleet fuel efficiency.
• The Hercules rig is expected to commence revenue generation in Q4 following its mobilization to Norway.

Bearish Highlights

• Contract revenue decreased to approximately $70 million from $90 million in the previous quarter.
• Operating costs rose significantly due to the full operational costs of the Hercules rig and amortized mobilization costs.

Bullish Highlights

• Adjusted EBITDA increased to approximately $167 million from $131 million in the previous quarter.
• The company issued a NOK 750 million bond with a 3.25% coupon rate, refinancing existing debt.
• SFL secured about $1 billion in financing this year, with $700 million drawn down during the quarter.

Misses

• Under U.S. GAAP, total operating revenues were reported at approximately $255 million, lower than the $263 million in gross charter hire received.

Q&A Highlights

• Operating expenses are around $200,000 per day, which can be reduced between contracts to $75,000 to $100,000 per day.
• The company sold a 2005-built 1,700 TEU container vessel chartered to Maersk and is considering rechartering or selling other older vessels.

SFL Corporation's Q3 results demonstrate continued financial growth and strategic fleet management. With strong dividends and a significant backlog, SFL focuses on enhancing its fleet's efficiency and operational capabilities.

InvestingPro Insights

SFL's robust performance in Q3 2024 is complemented by key metrics from InvestingPro, highlighting a gross profit margin of 62.99% and an 18.81% revenue growth over the last twelve months. SFL's consistent dividend payments for 21 years underline its commitment to shareholder returns.

Full transcript – SFL Corporation Ltd (SFL) Q3 2024:

Espen Nilsen Gjøsund: Hello, everyone, and welcome to SFL's Third Quarter 2024 Conference Call… [Transcript continues with highlights from various executives regarding financials, fleet details, operational insights, and Q&A sessions].

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