Core Viewpoint - SFL Corporation Ltd. plans to offer 8,000,000 common shares through an underwritten public offering, with net proceeds aimed at general corporate purposes, including vessel acquisitions [1]. Group 1: Offering Details - The offering will consist of 8,000,000 common shares with a par value of $0.01 each [1]. - Morgan Stanley is the sole bookrunning manager, while BTIG, LLC serves as the lead manager for the offering [2]. - The company intends to grant underwriters a 30-day over-allotment option to purchase an additional 1,200,000 common shares [6]. Group 2: Company Background - SFL Corporation has a strong track record in the maritime industry, having paid dividends quarterly since its NYSE listing in 2004 [4]. - The company's fleet includes tanker vessels, bulkers, container vessels, car carriers, and offshore drilling rigs, supported by long-term charters and asset growth [4]. Group 3: Regulatory and Documentation - The offering is being conducted via a prospectus supplement and accompanying base prospectus, with a registration statement filed with the U.S. Securities and Exchange Commission [7].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of May 2024 Commission File Number: 001-32199 SFL Corporation Ltd. (Translation of registrant's name into English) Par-la-Ville Place 14 Par-la-Ville Road Hamilton, HM 08, Bermuda (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under co ...

Financial Data and Key Metrics Changes - Total charter revenues for Q1 2024 were $236 million, a 13% increase from the previous quarter, driven by new car carriers and increased revenues from the drilling rig Hercules [7] - EBITDA equivalent cash flow was approximately $152 million, significantly higher than the previous quarter, with a total of $523 million over the last 12 months [8] - Net income for the quarter was around $45 million, or $0.36 per share, compared to $31.4 million or $0.25 per share in the previous quarter [40] Business Line Data and Key Metrics Changes - The container fleet generated gross charter hire of approximately $90 million, including $3 million in profit share related to fuel savings [26] - Tankers on long-term charters generated approximately $30 million in gross charter hire, consistent with the previous quarter [34] - The drilling rigs generated approximately $66.5 million in contract revenues, up from $45 million in the previous quarter, with Hercules contributing approximately $47 million [35][36] Market Data and Key Metrics Changes - The fixed rate backlog stands at approximately $3.6 billion, providing strong visibility on future cash flows [10][33] - The company has a diversified fleet with 76 maritime assets, with container vessels making up just under 50% of the backlog [18][19] Company Strategy and Development Direction - The company is focused on long-term charters with strong end users, moving away from financing-type bareboat charters [19] - Recent acquisitions include new dual fuel chemical carriers and long-term charters with Maersk, enhancing the charter backlog and revenue potential [11][15] - The company is investing in energy efficiency measures across its fleet to maintain competitiveness and reduce emissions [23][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market, citing low order books in specific segments and the potential for continued firm market conditions [48] - The company is monitoring opportunities for long-term contracts in the drilling sector, with a focus on maximizing the utilization of its assets [52][68] Other Important Information - The company announced an increase in its quarterly dividend to $0.27 per share, marking the 81st consecutive cash dividend [9][43] - A new $150 million senior unsecured sustainability-linked bond was raised to refinance existing debt and for general corporate purposes [16][41] Q&A Session Summary Question: Insights on recent chemical tanker acquisitions - Management explained the rationale for employing one vessel in Stolt-Nielsen's pool, highlighting the visibility on charter revenues and market opportunities [46][48] Question: Commentary on Hercules and Linus revenue - Management provided updates on Hercules mobilizing to Canada and the revenue increase for Linus due to index-linked contracts [50][53] Question: Thoughts on dividend sustainability - Management indicated a cautious approach to dividend increases, balancing between shareholder returns and investment opportunities [58][60] Question: Future employment opportunities for Hercules - Management discussed the potential for extended deployment of Hercules and the tight market for harsh environment rigs [56][66] Question: Long-term charter market in tankers - Management noted the shift towards long-term contracts in the tanker market and the company's strategy to find strong counterparties [67][68]

Financial Obligations and Shareholder Returns - The company redeemed the full outstanding amount of $84.9 million under the 4.875% senior unsecured convertible bonds due 2023, settling the remaining principal in cash [610]. - During the year ended December 31, 2023, the company repurchased a total of 1,095,095 shares at an average price of approximately $9.27 per share, totaling $10.2 million, with $89.8 million remaining under the authorized Share Repurchase Program [614]. - The company paid four dividends totaling $0.97 per common share, amounting to $123.0 million during 2023 [619]. - As of December 31, 2023, the company had total contractual cash obligations of $3,268.1 million, with $1,088.7 million due within one year [621]. Market Trends and Performance - The tanker market saw average earnings of approximately $40,000 per day in December 2023, with a forecasted crude tanker demand increase of approximately 5.9% for 2023 [628]. - The dry bulk fleet increased by 3.0% in total deadweight tonnage (dwt) during 2023, while demand increased by 4.4% in tonne miles [630]. - The containership charter market experienced a correction in 2023 but is now strengthening due to rerouting of vessels, resulting in elevated freight and chartering rates [632]. - Global seaborne container trade is estimated to have increased by 7% year over year during Q4 2023, with full year volumes only marginally up by approximately 0.3% or 1.6% in TEU-miles [633]. - The total container vessel fleet is projected to be 20% larger by the end of 2025 compared to the start of 2023, driven by continued fleet capacity growth [633]. Offshore Drilling Market Insights - The offshore drilling rig utilization improved from 83% in 2020 to 93% in 2023 due to increased global demand for oil and gas and a lower supply of offshore drilling rigs [635]. - Increased capital expenditures by oil and gas companies have led to more exploration and development activity, positively impacting the demand for offshore drilling rigs [635]. - The market outlook for offshore drilling rigs has improved as older rigs have been retired and demolished, contributing to better utilization rates [635]. - The offshore drilling market has faced challenges due to fluctuating oil prices, with Brent crude prices ranging from $20 in 2020 to above $100 per barrel in 2022 [634]. - Financial difficulties have been experienced by some drilling rig owners and operators due to lower oil prices since 2014, leading to breaches of bank covenants and financial restructurings [634]. Shipping Index and Volatility - At the end of January 2024, the Shanghai Containerized Freight Index (SCFI) increased to approximately 2,200 points, reflecting a recovery from the low of 1,030 points in January 2023, which was down 80% from the peak of 5,110 points in January 2022 [633]. - The SCFI index at the end of 2021 was over 5,000 points, indicating significant volatility in the container shipping market over the past few years [633]. - Market sources anticipate continued pressure for container shipping in the coming years, influenced by developments in the Red Sea [633]. Share Options and Capital - The company awarded a total of 440,000 options to officers, employees, and directors in February 2023, with an initial strike price of $10.34 per share [616]. - The additional paid-in capital arising from share options granted was $1.6 million in 2023 [615].

STATE OF THE ART EFFICIENY PROGRAM ON SIX VESSELS Supreme anti fouling paint New bulbous bow New propeller Exhaust gas cleaning systems Variable frequency drive for pumps and fans Capacity increase from 13,800 to 15,400 TEU by modifying lashing bridges and gears 20% EMISSION REDUCTION PER TEU -20% Pre upgrade Post upgrade 6 SFL Financial Performance | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------|----------------------------------------- ...

Financial Data and Key Metrics - Total charter revenues for Q4 2023 were $209 million, with EBITDA at $132 million, in line with Q3 2023 [4] - Net income for Q4 2023 was $31 million, or $0.25 per share, impacted by one-off items such as negative mark-to-market on hedging instruments and accounting effects on Hercules [4] - The company has paid dividends every quarter since 2004, accumulating to over $30 per share, or nearly $2.7 billion in total [5] - Fixed rate backlog stands at approximately $3.2 billion, concentrated around long-term charters with strong end users [5] Business Line Data and Key Metrics - The fleet consists of 73 maritime assets, including 15 dry bulk vessels, 36 container ships, 13 tankers, 2 drilling rigs, and 7 car carriers [7][8] - Utilization across the shipping fleet was 99.7% in Q4, with 99% utilization for drilling rigs [12] - Container fleet generated $92 million in gross charter hire in Q4, including $3.4 million in profit share from fuel savings [15] - Tankers generated $30 million in gross charter hire, while dry bulk carriers contributed $21 million, with $7.3 million from spot and short-term market [23][24] - Drilling rigs generated $44.9 million in contract revenues, down from $64.1 million in Q3 due to fewer contract days for Hercules [25][27] Market Data and Key Metrics - The company has diversified its fleet and counterparties, with container vessels now representing just under 50% of the backlog [16] - 95% of charter revenues in Q4 came from time charter contracts, with only 5% from bareboats or dry leases [17] - The company operates across multiple sectors, with commercial operations in Oslo and operational management in Singapore and Stavanger [18] Company Strategy and Industry Competition - The company has transformed its operating model over the last decade, moving away from bareboat charters to assume operating exposure, making it relevant for large industrial end users [9] - The company focuses on fleet optimization, including investments to minimize off-hire, increase cargo capacity, and reduce energy consumption, particularly in light of IMO carbon intensity regulations [11] - The company is working with main container charterers like Maersk and Hapag-Lloyd to increase energy efficiency, estimating a 20% reduction in fuel consumption and emissions per TEU carried [12][13] Management Commentary on Operating Environment and Future Outlook - Management highlighted the company's strong balance sheet, with $165 million in cash and cash equivalents at quarter-end, and a fixed charter rate backlog of $3.2 billion providing strong cash flow visibility [37] - The company is optimistic about 2024, with opportunities in multiple segments, including tankers, car carriers, and containers, despite a slow 2023 due to rising newbuilding prices and interest rates [41][44] - Management emphasized the importance of fuel efficiency and new fuel types, such as LNG and methanol, in future vessel investments [48][49] Other Important Information - The company has $77 million in remaining CapEx commitments for two car carriers under construction, with an estimated net cash proceeds of $45 million upon delivery [35] - The rig Linus is scheduled for a special periodic survey in Q2 2024, with an estimated net capital expenditure of $30 million [36] Q&A Session Summary Question: Opportunities for capital deployment in 2024 - Management sees opportunities in multiple segments, including tankers, car carriers, and containers, with a focus on long-term charters and fuel efficiency [41][44] Question: Container market dynamics and operational changes - Management noted that liner companies are focused on efficiency and cost per unit, with increasing interest in fuel-efficient vessels due to longer transportation legs caused by canal disruptions [45][46] Question: Dry bulk fleet and portfolio strategy - The dry bulk fleet is primarily traded in the short-term market due to limited long-term charter opportunities, with potential for asset sales if market conditions improve [51][53] Question: Geopolitical impact on business, particularly Red Sea disruptions - Management noted that while geopolitical issues like Red Sea disruptions increase fuel consumption for customers, the company's long-term charters mitigate direct financial impact [63][65]

Financial Performance - Total operating revenues for the nine months ended September 30, 2023, increased to $542.7 million, up 14.8% from $472.6 million in the same period of 2022[10] - Net income for the nine months ended September 30, 2023, decreased to $52.6 million, down 65.9% from $154.3 million in the same period of 2022[10] - Basic earnings per share for the nine months ended September 30, 2023, was $0.42, compared to $1.22 for the same period in 2022[10] - Comprehensive income for the nine months ended September 30, 2023, was $51.8 million, down from $172.0 million in the same period of 2022[12] - For the nine months ended September 30, 2023, the net income available to stockholders was $52.6 million, a decrease of 65.9% compared to $154.3 million for the same period in 2022[40] - The basic earnings per share (EPS) for the nine months ended September 30, 2023, was $0.42, down from $1.22 in the same period of 2022, reflecting a decline of 65.5%[40] - Net operating income decreased to $167.2 million for the nine months ended September 30, 2023, down from $201.1 million in the prior year, primarily due to expenses related to the Hercules drilling rig[184] - Net income for the period decreased by $101.7 million to $52.6 million, attributed to a rise in interest expenses by $44.5 million due to new loans for vessel acquisitions[185] - Tax expense of $2.3 million was reported for the nine months ended September 30, 2023, with no such expense in the same period in 2022[185] Assets and Liabilities - Total assets as of September 30, 2023, decreased to $3.67 billion from $3.86 billion as of December 31, 2022[16] - Total liabilities decreased to $2.63 billion as of September 30, 2023, from $2.77 billion as of December 31, 2022[16] - Cash and cash equivalents at the end of the period were $118.0 million, down from $188.4 million at the start of the period[18] - As of September 30, 2023, the Company had a net balance of $2,623.9 million in vessels, rigs, and equipment after accounting for depreciation and impairments[52] - As of September 30, 2023, total debt principal was $2,085.2 million, a decrease from $2,213.6 million as of December 31, 2022, reflecting a reduction of approximately 5.8%[76] - The current portion of finance lease liability increased significantly to $210.301 million from $53.655 million as of December 31, 2022[123] - As of September 30, 2023, the company had $432.96 million in total finance lease liabilities, a decrease from $472.996 million as of December 31, 2022[123] Revenue Breakdown - Time charter revenues increased by 11% to $388.5 million, driven by the acquisition of additional vessels[193] - Voyage charter revenues decreased by 34% to $31.3 million, primarily due to the sale of two Suezmax tankers and two chemical tankers[195] - Drilling contract revenues amounted to $102.0 million, significantly up from $0.2 million in the same period last year, following the commencement of operations for the Hercules rig[196] - River Box, an associated company, reported operating revenues of $13.8 million for the nine months ended September 30, 2023[72] Shareholder Actions - The company repurchased 1,095,095 shares during the nine months ended September 30, 2023[22] - The company declared dividends of $91.3 million for the nine months ended September 30, 2023, compared to $45.2 million in the same period of 2022[22] - The company declared dividends of $0.24 per share on three occasions during the nine months ended September 30, 2023[113] - A share repurchase program was authorized for up to $100 million, with 1,095,095 shares repurchased at an average price of approximately $9.27 per share, totaling $10.2 million[114] - The Company declared a dividend of $0.25 per share on November 8, 2023, payable on or around December 28, 2023[148] Financial Instruments and Debt - The weighted average interest rate for floating rate debt increased to 5.76% as of September 30, 2023, compared to 5.30% at the end of 2022[78] - The Company issued $150.0 million in senior unsecured sustainability-linked bonds in February 2023, with a fixed interest rate of 8.875% per annum[81] - A $150.0 million senior secured term loan facility was entered into in April 2023, with a net amount outstanding of $149.3 million as of September 30, 2023[82] - Lease debt financing increased to $515.0 million as of September 30, 2023, up from $394.6 million at the end of 2022[76] - The total net notional principal amount subject to interest rate swap agreements was $0.4 billion as of September 30, 2023, down from $0.6 billion at the end of 2022[91] - The Company redeemed NOK700 million senior unsecured floating rate bonds due 2023 in full at maturity in September 2023[94] - The Company has not entered into forward contracts for transaction or translation risk, exposing it to potential adverse effects from currency fluctuations[95] Asset Sales and Impairments - The Company recorded a gain of $2.2 million from the sale of the VLCC, Landbridge Wisdom, which generated net sale proceeds of $52.0 million[33] - The two Suezmax tankers sold during the nine months ended September 30, 2023, resulted in a gain of $16.4 million with net sale proceeds of $84.9 million[34] - The Company recorded an impairment loss of $7.4 million prior to the disposal of two chemical tankers during the nine months ended September 30, 2023[35] - A net gain of $18.7 million was recorded from the disposal of assets, including two Suezmax tankers and two chemical tankers[198] Investments and Capital Expenditures - Capital improvements of $120.2 million were made on the Hercules drilling rig, including $69.8 million for Special Periodic Survey costs[53] - The Company had total investments in sales-type leases and leaseback assets of $58.5 million as of September 30, 2023, down from $119.0 million at the end of 2022[64] - The Company has paid $102.0 million for two dual-fuel 7,000 CEU newbuilding car carriers, with the first delivered in September 2023 and the second in November 2023[159] - Capital commitments for shipbuilding contracts totaled $135.9 million as of September 30, 2023, down from $209.7 million for four newbuilding car carriers as of December 31, 2022[146] Other Financial Items - The Company reported a total other financial items net loss of $30,000 for the nine months ended September 30, 2023, compared to a gain of $13.4 million in the same period of 2022[43] - The Company recognized a mark to market loss of $0.5 million on equity securities during the nine months ended September 30, 2023[49] - The estimated fair value of interest rate and currency swap contracts was calculated using independent valuation techniques based on contracted cash flows and interest rates as of September 30, 2023[100] - The estimated fair value of NOK700 million senior unsecured floating rate bonds due 2024 was $65,753,000, compared to $70,734,000 as of December 31, 2022[96]

SFL Corporation Ltd. (NYSE:SFL) Q3 2023 Earnings Conference Call November 8, 2023 8:30 AM ET Company Participants Ole Hjertaker - Chief Executive Officer Trym Sjølie - Chief Operating Officer Aksel Olesen - Chief Financial Officer Conference Call Participants Richard Diamond - Castlewood Capital Unidentified Company Representative Welcome to SFL's Third Quarter 2023 Conference Call. My name is [indiscernible] and I'm an analyst in SFL. Our CEO, Ole Hjertaker will start the call by briefly going through the ...

$0.25 79th consecutive quarterly dividend $118m Cash and cash equivalents $3.4bn fixed revenue backlog Dividend per share 11 1) Pro-forma illustration of cash flow is not as accounted for under US GAAP. This is used as an internal guideline to assess the Company's performance. Note that figures are net of extraordinary and non-cash items, and are including charter hire from assets in 100% owned subsidiaries classified as 'Investment in associates' 8 Income Statement | --- | --- | --- | --- | --- | |-------| ...

[Report Overview](index=1&type=section&id=Form%206-K%20Report%20Overview) [Cover Page and Introduction](index=1&type=section&id=Cover%20Page%20and%20Introduction) SFL Corporation Ltd.'s Form 6-K report provides unaudited interim financial statements and MD&A for the six months ended June 30, 2023 - The report is a Form 6-K for a foreign private issuer, SFL Corporation Ltd., filed for the month of August 2023[1](index=1&type=chunk) - It includes the unaudited condensed interim financial statements and related Management's Discussion and Analysis (MD&A) for the six months ended June 30, 2023[3](index=3&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Total operating revenues increased to $337.8 million, while net income sharply declined to $23.3 million for the six months ended June 30, 2023 Consolidated Statements of Operations Highlights (Six months ended June 30) | Metric | 2023 (in thousands of $) | 2022 (in thousands of $) | Change | | :--- | :--- | :--- | :--- | | Total operating revenues | 337,827 | 305,686 | ▲ 10.5% | | Net operating income | 101,791 | 135,634 | ▼ 25.0% | | Interest expense | (82,554) | (50,104) | ▲ 64.8% | | Net income | 23,264 | 104,429 | ▼ 77.7% | | Basic earnings per share | $0.18 | $0.82 | ▼ 78.0% | | Diluted earnings per share | $0.18 | $0.79 | ▼ 77.2% | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for H1 2023 significantly decreased to $24.7 million, driven by lower net income and reduced other comprehensive income Consolidated Statements of Comprehensive Income (Six months ended June 30) | Metric | 2023 (in thousands of $) | 2022 (in thousands of $) | | :--- | :--- | :--- | | Net income | 23,264 | 104,429 | | Other comprehensive income, net of tax | 1,412 | 13,887 | | **Comprehensive income** | **24,676** | **118,316** | [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $3.81 billion, with total liabilities also reducing to $2.76 billion as of June 30, 2023 Consolidated Balance Sheet Highlights | Metric | June 30, 2023 (in thousands of $) | Dec 31, 2022 (in thousands of $) | | :--- | :--- | :--- | | Cash and cash equivalents | 201,466 | 188,362 | | Total assets | 3,806,136 | 3,861,330 | | Short-term debt | 347,845 | 921,270 | | Long-term debt | 1,762,203 | 1,279,786 | | Total liabilities | 2,755,110 | 2,770,099 | | Total stockholders' equity | 1,051,026 | 1,091,231 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to $231.0 million, while investing and financing activities resulted in net cash outflows for H1 2023 Consolidated Statements of Cash Flows Highlights (Six months ended June 30) | Metric | 2023 (in thousands of $) | 2022 (in thousands of $) | | :--- | :--- | :--- | | Net cash provided by operating activities | 230,962 | 166,707 | | Net cash used in investing activities | (35,544) | (106,008) | | Net cash (used in)/provided by financing activities | (182,314) | 14,871 | | Net change in cash | 13,104 | 75,570 | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity slightly increased to $1.051 billion, influenced by net income, dividend declarations, and share repurchases in H1 2023 - The company repurchased **527,417 shares** for **$4.8 million** during the six months ended June 30, 2023[24](index=24&type=chunk) - Dividends declared in the first six months of 2023 totaled **$60.9 million**, compared to $16.0 million from accumulated profit in the same period of 2022 (with an additional $37.3 million from contributed surplus)[24](index=24&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 2: Gain on Sale of Assets and Termination of Charters](index=10&type=section&id=Note%202%3A%20Gain%20on%20Sale%20of%20Assets%20and%20Termination%20of%20Charters) The company recorded a net gain of $16.4 million from two Suezmax tanker sales and a minimal gain from two chemical tankers after impairment in H1 2023 - Sold two Suezmax tankers, Glorycrown and Everbright, for net proceeds of **$84.9 million**, recording a gain of **$16.4 million**[35](index=35&type=chunk) - Sold two chemical tankers, SFL Weser and SFL Elbe, for net proceeds of **$19.4 million**. An impairment loss of **$7.4 million** was recorded prior to the sale[36](index=36&type=chunk) [Note 6: Vessels, Rigs and Equipment, Net](index=13&type=section&id=Note%206%3A%20Vessels%2C%20Rigs%20and%20Equipment%2C%20Net) Net book value of vessels, rigs, and equipment decreased to $2.59 billion, with $120.2 million in capital improvements and a $7.4 million impairment loss - Capital improvements totaled **$120.2 million**, mainly for the Special Periodic Survey (SPS) and other upgrades on the semi-submersible drilling rig Hercules[54](index=54&type=chunk) - An impairment loss of **$7.4 million** was recorded on two chemical tankers prior to their disposal[56](index=56&type=chunk)[57](index=57&type=chunk) [Note 7: Capital Improvements, Newbuildings and Vessel Purchase Deposits](index=14&type=section&id=Note%207%3A%20Capital%20Improvements%2C%20Newbuildings%20and%20Vessel%20Purchase%20Deposits) The company paid $112.5 million for four newbuilding dual-fuel car carriers, chartered to Volkswagen Group and K Line for future deliveries - Paid **$47.3 million** for two dual-fuel 7,000 CEU newbuilding car carriers, which will commence 10-year charters to Volkswagen Group upon delivery in H2 2023[60](index=60&type=chunk) - Paid **$65.2 million** for another two dual-fuel 7,000 CEU newbuilding car carriers, which will commence 10-year charters to K Line upon delivery in 2024[61](index=61&type=chunk) [Note 12: Short-Term and Long-Term Debt](index=18&type=section&id=Note%2012%3A%20Short-Term%20and%20Long-Term%20Debt) Total debt principal decreased to $2.13 billion, following significant refinancing activities including new bond issuance and convertible bond redemption Debt Principal Summary | Debt Category | June 30, 2023 (in thousands of $) | Dec 31, 2022 (in thousands of $) | | :--- | :--- | :--- | | Total debt principal | 2,130,699 | 2,213,636 | | Less: Current portion | (347,845) | (921,270) | | **Total long-term debt** | **1,762,203** | **1,279,786** | - In February 2023, the company issued **$150.0 million** of 8.875% senior unsecured sustainability-linked bonds due 2027[81](index=81&type=chunk) - The company redeemed the full outstanding amount of its 4.875% senior unsecured convertible bonds due 2023, satisfying the remaining **$84.9 million** in cash at maturity[43](index=43&type=chunk)[79](index=79&type=chunk) [Note 13: Financial Instruments](index=20&type=section&id=Note%2013%3A%20Financial%20Instruments) The company utilizes interest rate swaps to manage debt risks, is transitioning to SOFR, and has significant revenue concentration with top charterers - The total net notional principal amount of interest rate swap agreements was **$0.4 billion** as of June 30, 2023, down from $0.6 billion at year-end 2022[90](index=90&type=chunk) - The company is transitioning its loan and swap agreements from LIBOR to SOFR, with no material impact anticipated on financial statements[91](index=91&type=chunk) Top Customer Revenue Concentration (Six months ended June 30, 2023) | Charterer | % of consolidated operating revenues | | :--- | :--- | | Maersk A/S | 31% | | Evergreen Marine Corporation | 15% | | Conocophillips Skandinavia AS | 11% | | Trafigura Maritime Logistics Pte Ltd | 9% | | Golden Ocean Group Limited | 8% | [Note 14: Share Capital, Additional Paid-In Capital and Contributed Surplus](index=24&type=section&id=Note%2014%3A%20Share%20Capital%2C%20Additional%20Paid-In%20Capital%20and%20Contributed%20Surplus) The Board authorized a $100 million share repurchase program, with $4.8 million in shares repurchased and two quarterly dividends declared in H1 2023 - On May 8, 2023, the Board of Directors authorized a share repurchase program for up to **$100 million** of the company's common shares, valid until June 30, 2024[112](index=112&type=chunk) - During H1 2023, the company repurchased **527,417 shares** at an average price of **$9.15 per share**, for a total of **$4.8 million**[112](index=112&type=chunk) - The company declared two dividends of **$0.24 per share** each in February and May 2023[111](index=111&type=chunk) [Note 19: Commitments and Contingent Liabilities](index=30&type=section&id=Note%2019%3A%20Commitments%20and%20Contingent%20Liabilities) The company has significant capital commitments for new car carriers ($194.2 million) and vessel upgrades ($57.0 million), with $2.64 billion in assets pledged - The company has committed to paying approximately **$194.2 million** for the construction of four newbuilding dual-fuel car carriers[145](index=145&type=chunk) - There are commitments of approximately **$57.0 million** for efficiency upgrades, including scrubbers, on six vessels, with installations expected through 2024[144](index=144&type=chunk) - Assets with a book value of **$2.64 billion** are pledged under ship mortgages as security for loan facilities[138](index=138&type=chunk) [Note 20: Subsequent Events](index=31&type=section&id=Note%2020%3A%20Subsequent%20Events) Subsequent events include a declared dividend, a new rig contract for Hercules, the sale of VLCC Landbridge Wisdom, and additional share repurchases - On August 17, 2023, the Board declared a dividend of **$0.24 per share**[147](index=147&type=chunk) - In August 2023, the rig Hercules secured a contract with Equinor Canada Ltd. expected to commence in Q2 2024[148](index=148&type=chunk) - Subsequent to the quarter end, the company repurchased an additional **566,378 shares** for **$5.3 million**[149](index=149&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) [General and Recent Developments](index=32&type=section&id=General%20and%20Recent%20Developments) SFL operates a diverse fleet, with H1 2023 developments including rig investment, vessel sales, new contracts, financing, and a share repurchase program - As of August 31, 2023, the company's assets include **15 dry bulk carriers**, **32 container vessels**, **one jack-up rig**, **one semi-submersible drilling unit**, **13 oil tankers**, and **7 car carriers** (including 4 under construction)[154](index=154&type=chunk) - Invested **$120.2 million** for a Special Periodic Survey (SPS) and upgrades on the drilling rig Hercules[159](index=159&type=chunk) - Sold two Suezmax tankers for **$84.9 million** and two chemical tankers for **$19.4 million**[162](index=162&type=chunk) - Secured new contracts for the rig Hercules with Galp Energia and Equinor[164](index=164&type=chunk)[165](index=165&type=chunk) - Issued **$150.0 million** in new sustainability-linked bonds and redeemed the remaining **$84.9 million** of its 2023 convertible bonds[166](index=166&type=chunk)[167](index=167&type=chunk) - Initiated a **$100 million** share repurchase program and acquired **527,417 shares** for **$4.8 million** by June 30, 2023[175](index=175&type=chunk)[176](index=176&type=chunk) [Operating Results Analysis](index=35&type=section&id=Operating%20Results%20Analysis) Net operating income decreased to $101.8 million, primarily due to the rig Hercules being off-hire, despite a 10.5% increase in total operating revenues - The decrease in net operating income is principally due to the rig Hercules being off-hire for its SPS and upgrades, leading to operating expenses without revenue during H1 2023[183](index=183&type=chunk) - Time charter revenues increased by **11%** due to the acquisition of six Suezmax tankers, two product tankers, two container vessels, and one car carrier in 2022[192](index=192&type=chunk) - Drilling contract revenues of **$37.9 million** were earned from the rig Linus, which was not contributing this revenue type in the prior-year period[195](index=195&type=chunk) - Interest expense rose to **$82.6 million** from $50.1 million, driven by new debt and a significant increase in average LIBOR rates (**5.15%** in H1 2023 vs. 1.02% in H1 2022)[207](index=207&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained $201.5 million in cash, generated $231.0 million in operating cash flow, and managed $2.78 billion in borrowings while complying with debt covenants - Cash and cash equivalents were **$201.5 million** as of June 30, 2023[217](index=217&type=chunk) - Net cash from operating activities increased to **$231.0 million** in H1 2023 from $166.7 million in H1 2022[218](index=218&type=chunk) Borrowings and Lease Liabilities Summary (as of June 30, 2023) | Category | Outstanding Balance (in millions of $) | | :--- | :--- | | Total bonds | 457.7 | | Lease debt financing | 455.5 | | U.S. dollar denominated debt | 1,217.4 | | **Total borrowings** | **2,130.6** | | Finance lease liabilities | 446.4 | | Finance lease liabilities in associated companies | 203.8 | | **Total borrowings and lease liabilities** | **2,780.8** | - The company was in compliance with all covenants under its long-term debt facilities as of June 30, 2023[225](index=225&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=43&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) [Risk Factors and Forward-Looking Statements](index=43&type=section&id=Risk%20Factors%20and%20Forward-Looking%20Statements) This section outlines key risks and uncertainties that could impact forward-looking statements, including economic conditions, interest rates, market volatility, and geopolitical events - The statement identifies key risks that could cause actual results to differ materially from projections[231](index=231&type=chunk) - Specific risks mentioned include: strength of world economies and currencies, rising interest rates, counterparty risk, cyclicality of the seaborne transportation industry, volatility of oil and gas prices, and changes in environmental regulations[232](index=232&type=chunk)[233](index=233&type=chunk) - The company notes potential impacts from supply chain disruptions, the Russian-Ukrainian conflict, and significant global inflationary pressures[233](index=233&type=chunk) [Signatures](index=46&type=section&id=Signatures) [Report Authorization](index=46&type=section&id=Report%20Authorization) The report is signed and authorized by Aksel C. Olesen, Principal Financial Officer of SFL Corporation Ltd., on August 31, 2023 - The report was signed on behalf of the registrant by Aksel C. Olesen, Principal Financial Officer[237](index=237&type=chunk)[239](index=239&type=chunk) - The date of the signature is August 31, 2023[239](index=239&type=chunk)