SFL - Earnings call transcript Q3 2024

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Espen Nilsen Gjøsund

Hello, everyone, and welcome to SFL's Third Quarter 2024 Conference Call. My name is Espen Nilsen. I'm Vice President of Investor Relations in SFL.

Our CEO, Ole Hjertaker, will start the call with an overview of the third quarter highlights. Then our Chief Operating Officer, Trym Sjølie, will comment on vessel performance matters, followed by our CFO, Aksel Olesen, who will take us through the financials.

be explain opening so the the session. will and for prior call Q&A will I procedure conference concluded up by questions, to The to do

that presentation, within intends, statements meaning estimates expects, are of of Securities expressions like Before XXXX. contain Private the I intended U.S. or these Reform begin call will similar our to we forward-looking to anticipates, note Litigation this the Words conference forward-looking as statements. would identify Act such

These performance. inherently future are of and guarantees to not are different those and activities are statements our be on and uncertainties future from statements. plans operations set subject statements current results cause Forward-looking based risks of forth and materially forward-looking that in expectations could to the

actual but could differ in to conditions to, that are limited shipping, factors offshore credit include, the Important cause and not markets. results

on place not therefore, should, undue You forward-looking reliance statements. these

and detailed which Please a our the within for operating results Securities refer financial uncertainties and Commission risks and condition. more our to may bearing of on Exchange a direct filings have discussion

CEO, I our word leave Hjertaker, with third the over to for will quarter. highlights Then the Ole

Ole Hjertaker

you, Thank Espen.

from was a revenues $XXX as this We our our fleet. profile and second company approximately is the XXrd EBITDA a the and up quarter, of quarter. in reported diversified with quarter maritime million, flow continue are unique We the more than infrastructure million building dividend announcing now $XXX significantly cash equivalent which

And mark-to-market quarter, positive fuel or $XXX relating The at $XX approximately quarter on million around cost the share per million or items. the in by one-off last the in $X.X and we in came $X.X and noncash bulkers contributions Over net million negative income has had months, the savings profit equivalent share. million. offset XX to capesize EBITDA in been $X.XX

through quarter. our Due started the Olesen, includes CFO, also for second U.S. quarter. period in on more drilling the the goes details that mobilization numbers the in revenue expense this will quarter for give accounting and rig the GAAP rules, the he to the Hercules Aksel when

Our customers backlog billion. short-term giving the with operate $X.X pool approximately revenues excludes fixed cash This in vessels on chemical visibility. revenues importantly, new excludes dual-fuel is rating, to this trading will us from market and a rate backlog X/X a flow stands figure of stale with carrier that unique at investment-grade in tankers. And also the the

It are value also $X.XX with Group have our And seen Volkswagen years, XX% operating excludes net model, paying future Vito. significantly around we or Maersk, on income. can line the profit to to large quarterly charters, have in shareholders, a dividend we return to commitment completely dividend optionality, our end making share Most for share XX users of which yield. and contribute long-term like our transformed we the over are relevant of company's vessels us last and per

have billion been extended multiple XX-year transaction charters adding in with We container ordered in that alone. recently charters time combination also large existing X and have busy $X.X vessels and renewing

far this so including the In quarter. addition, third year, vessels of X vessels delivery we X taken new have during

process this about are vessels later. Operating other will of We in the Officer, talk Trym also our upgrading Sjølie more and Chief several

swapped charter in approximately a It matching financing funding where loan a in a This to another X.XX% dollars from used asset that we was also a Norwegian have early quarter, it was the note in perspective interest. a maturities, the all been quarter During to tenors. busy U.S. short-term effectively bond addressed has refinance we expire was unsecured fixed with loan, due bond virtually floating XXXX. debt and at as to kroner raised XXth rate issued primarily row. have This we

over to I And give that, word the COO, Sjølie. with will our Trym

Trym Sjølie

newbuilding program backlog and the shipping this our XX X including our owned stands X from we vessels dry our assets in XX and you, as When X car of up XX is tankers, $X.X ships, portfolio vessels, year, maritime container bulk at and drilling XX Thank delivered well assets fleet The current made managed have rigs. as Ole. billion. carriers

have fleet first-class of out We a long-term mostly assets charterers to charters. charged diversified on

dry Container and vessels assets of charter the backlog. the from only with is from quarter, leases. time X% largest almost all the segment XX% boats contracts from XX% revenues bare third came In of or charter

savings revenues, cash cost In from had we've addition have charter contribution significant fuel. rates relating charter profit to flow -- we arrangements time, both to fixed to on share and rate over

have rigs, rest and type the of of In time on million. contributed arrangements QX, spot fleet $X.X Out we container have ships XX contracts and or the vessels about profit bareboat charter the trading. XX on

is technical across operation and operation out with multiple quite commercial Oslo Our operational and management have we complex Singapore and own sectors, vessels at and Stavanger. our of

have day vessels was In X in dock less utilization technical off-hire the dry XX%. QX, the we dockings. QX calendar had our and in in quarter, as fleet and days, about operating X,XXX dry been about overall defined across

survey. our our entered contract was to in up the drilling and October Canada of the due after rig mainly operation the in rig Norway. The in to way end The a from million QX Atlantic revenue on drilling July currently $XXX fleet being West Coast across end lines of from charter is Hercules a of special is QX, back which periodic

As part as vessels invest upgrades fleet. strategy, continue and existing decarbonization in as to of our well we new our to commercial

to Line, dual-fuel LNG by on service has carriers been fleet vessels X two, have LNG delivered been and and are stainless and tankers. ton It's stall X been delivered CEU Our already K car lately XX,XXX XX LRX X,XXX Volkswagen tankers. tankers steel chemical deadweight to dual-fuel enhanced charterers, and have newbuilding

October, delivered building container be in been our all vessel have X, XX,XXX by TEU Vitol. X newbuilds to of delivered new XXXX. LRXs to And are

and cooperation our saving works is also fleet to QX, grow important Such in backlog way energy had in our relationship existing we a from carried investment And were dock vessels. as devices Our upgrade continues. dry charterers in and increased with out. vessels where upgrades in X investments

X-year with for our our is performance relationship upgrades the new vessel Earlier and container to enhancements. year, close of of backlog on which charters this result and vessels, a cooperation we merge X increased large

The December upgrades from fuel onwards. will And first dock and reducing X TEU energy-saving this capacity cargo X,XXX about the X,XXX cargo to devices include while vessels boosting also increased consumption. intake, TEU

with year be Another QX will out. to X, also from upgrades XX,XXX TEU system and cargo dock vessels carried next energy

new On QX before remaining the charges. time be vessels will on Hapag-Lloyd X in the to Hapag-Lloyd X charters, the X-year completed delivery

newbuilding in in close contact operations, can various charterers. our work environmental delivering A improves team who This key Freight ever the a world on tool and operational in strong new and of and regulations, is by upgrades regionally important a tightening projects of renewal both and increasingly vessels. efficiency is technical globally. energy

the our word us Aksel to will through the I will quarter. the who now Olesen, highlights CFO, give take financial of over

Aksel Olesen

On vessels. container extraordinary quarter note Trym. hire flows guideline this large not you, noncash the on assess net performance $XXX approximately and to fuel this GAAP, savings our $X.X fleet. charter U.S. cash quarter. during in approximately coming that have also is This is The gross and for from share and illustration third with only company's X of company Thank of shown we approximately in container slide, includes related a Please our million third the forma of accordance our profit pro items. $XX of million to generated to million the

$XX The fuel carrier million, higher savings. car charter generated from approximately profit share the course, in fleet of quarter. including

of charter has gross in hire including from approximately million Our the gross generated $X.X X to profit approximately are long-term previous which tanker the on X hire million in share SFL up our the The approximately dry of in million vessels charter tanker delivery $XX vessels following capesize employed Golden XX long-term fleet North. X during generated approximately $XX generated bulk quarter. vessels, on million vessels charters from charters. $XX quarter,

The X short-term second hire in $X.X charter in and approximately the vessels $X.X employed net to approximately in contributed million quarter. compared million the market with spot

million compared to Norway generated the is approximately $XX long-term in quarter. the second our In $XX May million. approximately under assets in third ConocoPhillips for contract energy XXXX. quarter, in contract until revenues a Linus

compared revenues operations its the XX-year in second was special resumed as million finalizing after from survey. $XX July the rig approximately late million the quarter rig in During approximately $XX quarter, to

of $XXX,XXX approximately As to mechanism. rate November day per upwards X, adjusted the rate the contract has been under adjustment market rig's

U.S. Equinor mobilization GAAP a driven to During which with associated associated the with drilling that third drilling recorded mobilization quarter, the spent they Hercules in commenced are its costs specifies Canada. and fees contract. accordance recorded in costs be over during contracts and demobilization and are contract Revenue with

approximately increased as to compared $XX quarter, in operating For Operating the million just plus mobilization recorded million a million costs July third quarter. the full the amortized approximately revenue the million, we accounting in in from quarter, $XX the quarter per approximately rig mentioned. recorded early $XX up standards deferred second from second costs approximately as contract $XX costs from second

to of $XXX Our the to the previous of operating million adjusted in EBITDA the on to in million most approximately This Hercules $XX to quarter. quarter. for million quarter the compared mainly approximately back compared approximately and was quarter, $XX expenses summarizes due an million $XXX G&A contract second the the being for

on as profit reported to statement move the U.S. GAAP. loss under and Then

business a our from accounting on focuses strategy have of long-term company. contracts. we different our earnings As previous traditional calls, described in that's shipping statements And are charter those

of leaseback charter our type, mentees Some accounting are Therefore, repayment revenues and excluded activities and for part from associates in this assets of investment purposes. are operating the classified in includes U.S. investment capital leasing. financing revenues as a leases sales from our of direct classified revenues, as portion GAAP

which our third approximately approximately savings operating reasons Ocean. of is charter than bulk to actually received includes share for car $X.X quarter, we our total container $XXX million, according our U.S. hire of This GAAP for on vessels, approximately mentioned. of the revenues of on just million charter fuel Golden care and less to report $XXX some from profit vessels dry million large income So

dockings in due being of we contract from scheduled back the operating vessel as an new on had the expenses mainly quarter. Hercules During to deliveries, the vessel quarter, increase dry and

We driven an new also vessel by had Hercules Canada, tax respectively. depreciation and in increase and operations in deliveries

share approximately GAAP, approximately $X.XX in quarter. per of and a million according per million reported overall, net the or company profit U.S. the $XX.X previous to to So $X.XX share compared $XX.X or

$XX addition the million. issued approximately also The with balance Moving $X.X $XX million had in In to Nordic of value had cash maybe approximately reference and X-month X.XX the the the million, company of an sheet. NOK securities years. loan and $XXX September, a approximately bears million X.XX%. fixed is quarter above vessels at bond marketable end, NOK of market cash At rate market. million approximately on The of interest rate a credit are The X approximately the is debt-free equivalents. estimated the new of cash to company SFL in flows and swapped XXX coupon term

In with approximately January draw to offering, financing million exercised which approximately its the option arrangements to redeem the XXXX. quarter down recently new to $X NOK billion during the in the XXX has The subsequent balance of company due SFL quarter million end. was concluded connection being bond, $XXX and

XX% balance During of to container with installment the X% delivery. the is in XXXX. third quarter, quarter, XX,XXX vessels TEU X, of order at the and the due due delivery to company estimated the newbuilding of end closer paid The first the is fourth relating

by to facilities. We financed predelivery loan post-delivery expect and be this

offering gross in And by million shares. finally, company in the proceeds public issuing from X $XXX million July, common U.S. raised

equity XX%. So of the numbers, based on book had ratio company a the QX approximately

conclude. per the yield of dividend consecutive represents XXrd to share, which cash approximately $X.XX of has XX%. a declared The Then Board dividend

of acquisitions. we public both than and gross to our of financing going visibility fixed more rate refinancing the in and liquidity billion firm of raised charter renewals, at this with to vessels cash in $X.X addition us forward, a strong Following year and million becomes strong $XXX stands the balance billion, currently position, recently and flows $X recent so new a backlog address far providing existing investment charter sheet on proceeds

move session. and presentation And the to we with that, the Q&A on conclude

Espen Nilsen Gjøsund

Aksel. we from first Elmaghrabi. Sherif question you, [Operator our Thank Instructions] have And

Sherif Elmaghrabi

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

Ole Hjertaker

container of our a in fleet. have we significant Well, number ship

acquired So from from companies. also liner we container have to time, ships -- and directly time

which leasebacks, have high financial, more We from is sale away more gone it, doing levered in reality. a really call financing

charters. investments have we have over last all assets time some I there. would So legacy But say X, we've the long-term done been X the years

also think and others. those well. And out and think have we deals makes pretty Maersk us an for operational up likes we I of relevant Hapag-Lloyd and having like the built And have Volkswagen worked platform now

mind business we also look in So course, do in the we all as sectors that of for wouldn't that we, more segment on. opportunities focus

Sherif Elmaghrabi

the provide on shape Hercules up Norway, prospects with or you can And Namibia? contracting are charters? versus how with And going do Canada potential color to just how mobilizing there any conversations

Ole Hjertaker

the distance, The we And it winter rig given It's North rig for environment. it's Barents has Sea. to finalized in the and a that's There July. been pretty distance in the yes. time since recently has the take Sea. up harsh North worked in ultra efficient moved this previously And during Sea Equinor working maritime why the remember, it are call Norway. to there Well, opportunities drilling location the and now being you traveling Canada

I capable top managed the it's operators rate, rigs deemed very would or and drilling is, say, among X a it's most X of out by there. to who be Odfjell So sophisticated the

both So and looking we later XXXX. we that see year for next Sea Canada, North so in we expect West primarily the are near come don't into but or opportunities back in Africa, opportunities, in to many term,

we had the Africa. West North today, but So this market opportunities cannot a announced be We they earnings and -- more the segment. Sea believe focus single and specific also on near on their term, positive we on we outlook Otelo discussions see,

Espen Nilsen Gjøsund

We next Climent Molins. question will take from our

Climent Molins

revenue I on first Sherif's you the I was the Canada? contract wanted any to in on of on from expect to recognize up Equinor Hercules. follow QX do wondering, question all, with And

Ole Hjertaker

mean, thank I Yes, the rig to has the have now virtually of October. we you. been -- Yes, working end

moving rig there's month for So higher the been on full were compensated a afterwards. plus also

for, covered effectively in are X months out we quarter. of the So say, X fourth

a we and that, of contribution course, rig the from course, wait there decent of with contract, adjust for be next also this expenses we And along while trim the will, will quarter.

Climent Molins

would should is on from the throughout you modeling a part you Makes basis? commentary but perspective, the maybe more expect sense. could of open on And daily remain XXXX, one some this provide expenses asset a

Ole Hjertaker

Yes.

-- pattern. has have $XXX,XXX drilling is and crew, rounds, activities in and now around expenses marine with have working ongoing rig of been the in is, operating the that it You day. X per course, Namibia seen Canada as we day full night both crew, in with when full That operational region full rotation

reduce make we really in we And of to more to do -- need we when ready So sure go it's go on can how contract. do want? hot the a to expenses lot, between to we it's and drill contracts, it's out new how and that a all then that straight down we can operating -- much run do time the and equipment

safe. to if So you you from I if a perspective, you $XX,XXX day, modeling in be put $XXX,XXX should pretty think per

out get as On limit as the cost the here that primary to side, objective rig is much and manage can. we will, again. working cost we But our of course,

flows So in rig operations. we the generate from positive cash

Climent Molins

scenario. the This kind sense. worst-case like Makes of was

Espen Nilsen Gjøsund

question here. site on the We've received a

vessel. a vessels What the container fleet? other in container for your sold You've plans are XXXX-built the older

Ole Hjertaker

them a Yes. sell now It's Thank older on has cannot typically, time correct. TEU, a for we these we XX you. we longer until contract see seen been charter than vessels a feeder X,XXX typically sold on we term. period. with And Maersk container And over are We that that really we vessels own that have XXXX-built years. as vessels now recently vessel, ship

feel an sale. from this that the the to So nice anniversary of dispose a now is with is year, XX-year opportune we approaching that as profit next vessel time this

legacy some fleet. the older in also We have container ships other

That's -- ships bareboat will with there a Those structure. vessels MSC. container on on really are year. have X,XXX is quarter purchase We obligations second next there early financing X, those -- basically TEU vessels,

effectively So those be vessels then also out. phased would

do And during again, sister with off then now the charter, announced it now just -- a coming and may we Maersk or quarter. have may over to vessel we recently with as we we that sold have And did also sell one now. vessel with second we time. we what We that's are it vessel we recharter the of the assess similar we

And doing course, these other also portfolio. engines, are ECO words side older modern in from of and you that that effect if we is monitoring efficiency from these least built fuel very are of So X, the vessels from market, other XXXX this positive A remaining, vessels cetera. efficient look X,XXXs et that's with perspective, closely. X,XXX a away all all the vessels the then are -- with eco-design vessels the

ratio. improvement is our of that we efficiency an will in actually that So the fuel effect have

Espen Nilsen Gjøsund

Okay.

there I for to no participating the audience, call. like further As everyone in are questions thank this from conference would

have details in touch If you any page, with are there follow-up release are can through the questions management, on you all. us you web contact in the to the page Thank or get contact press our www.sflcorp.com.

SFL (SFL) 6 Nov 242024 Q3 Earnings call transcript