SFL — SFL Corporation Ltd.

SFL Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $174 million for Q1 2026.
• EBITDA: $108 million, consistent with Q4 2025.
• Net Income: $26 million, or $0.20 per share, a significant improvement from a net loss of $4.6 million in Q4 2025.
• Dividend: Increased to $0.22 per share, marking the 89th consecutive dividend payment.
• Charter Backlog: Approximately $3.7 billion, with over two-thirds from investment-grade counterparties.
• Cash Position: $128 million in cash and cash equivalents, plus $160 million available under undrawn credit facilities.

2. Strategic Updates and Business Highlights:

• SFL continues to position itself as a maritime infrastructure company with a diversified fleet, now comprising 57 maritime assets.
• A new contract for the Hercules drilling rig was announced, expected to generate approximately $170 million in backlog from 2027.
• The company successfully raised $75 million through a tap issuance of its 2030 senior unsecured bonds, reflecting strong market demand.
• The fleet's utilization rates were high, with container vessels and car carriers at 100%, and tankers and dry bulk at 99%.

3. Forward Guidance and Outlook:

• The company anticipates a strong second quarter, benefiting from historically high charter rates, particularly in the tanker segment, where 53% of vessel days have been covered at an average rate of $185,000 per day.
• SFL is exploring longer-term charter opportunities for its vessels, especially in the tanker market, given the current strength in rates.
• The company remains optimistic about the demand for high-specification drilling units and the overall maritime asset market.

4. Bad News, Challenges, or Points of Concern:

• The energy segment's utilization was lower at 50%, as the Hercules rig is currently warm stacked in preparation for its new contract.
• While the tanker market is strong, there is inherent volatility and uncertainty in spot rates, which could impact future earnings.
• The company is facing challenges in securing long-term charters for medium-sized bulkers, which typically have shorter charter durations.

5. Notable Q&A Insights:

• Management acknowledged the unexpected strength in tanker rates due to market disruptions and consolidation in the supply side for larger vessels.
• The decision to increase the dividend was supported by improved cash flow visibility and operational performance, particularly from the recently chartered vessels.
• Regarding the Hercules rig, management indicated that the required upgrades would be minimal and that some costs would be covered by the customer.
• The company is cautious about the medium-sized bulkers, preferring to keep them in the spot market rather than pursue shorter-term charters, which may not align with their strategic focus on longer-term contracts.

Overall, SFL demonstrated strong financial performance in Q1 2026, with positive developments in its fleet and strategic positioning, while also facing challenges related to market volatility and asset utilization.