Financial Highlights - The company declared its 79th consecutive quarterly dividend of $025 per share[1] - The company's cash and cash equivalents totaled $118 million at the end of the quarter[1,6] - The company's fixed revenue backlog stood at $34 billion[1] - Adjusted EBITDA for the quarter was $130 million[13] - Net income for the quarter was $293 million, resulting in earnings per share of $023[13] Operational Performance - Gross revenue for the quarter was $214 million[4] - The company's book equity ratio was 284% as of September 30, 2023[6,7] - The company redeemed a NOK bond worth approximately $49 million in Q3 using cash on the balance sheet[6,20] - The company delivered the first of four LNG dual-fuel car carriers in Q3[26,36]

[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)

Financial Performance - The company reported a net income of $16.9 million, or $0.13 per share, for the second quarter[16] - Adjusted EBITDA from consolidated subsidiaries was $100.9 million, with an additional $7.8 million from 49.9% owned associated companies[36] - Charter hire received in the quarter totaled $173.8 million, including $2.2 million of profit share[11] - Total operating revenues were $164.6 million, excluding $11.6 million of charter hire not classified as operating revenues under U S GAAP[13] Asset Transactions - The company sold and delivered the chemical tankers SFL Weser and SFL Elbe[2] - A book gain of $6.4 million was recorded from the sale of the Suezmax tanker Everbright[43, 3] - The VLCC Landbridge Wisdom is scheduled for delivery following the exercise of a purchase option, expected to result in a $10 million positive cash effect and a $2 million book gain in Q3[30] Fleet and Charters - The fixed-rate charter backlog stands at approximately $3.6 billion from owned and managed vessels[22] - The container fleet generated approximately $90.1 million in gross charter hire, with $2.2 million from profit share[26] - The dry bulk vessels generated approximately $23.6 million in gross charter hire[31] - The car carrier fleet generated approximately $6.4 million of charter hire[40] Offshore Rigs - The drilling rig Hercules completed its upgrade and mobilized to Canada for a contract with ExxonMobil[33] - A new contract was signed for Hercules with Equinor in Canada, securing employment until Q4 2024 and increasing backlog to approximately $200 million[36] Financing and Capital Expenditure - The company secured new financing arrangements totaling more than $1 billion in 2023[48] - SFL and Hapag-Lloyd agreed to invest approximately $65 million in efficiency upgrades on six 14,000 TEU vessels, with SFL's investment limited to $3 million[5] - The company has approximately $201 million of cash and cash equivalents[34]

Financial Data and Key Metrics Changes - The net income for the quarter was approximately $17 million, or $0.13 per share, impacted by the drilling rig Hercules, which had no revenues in the second quarter but incurred full operating expenses [6][33] - The EBITDA equivalent cash flow for the quarter was approximately $109 million, consistent with the previous quarter, while the last 12 months' EBITDA equivalent totaled $480 million [14][59] - Total operating revenues according to U.S. GAAP were approximately $165 million, down from approximately $174 million in the previous quarter [32] Business Line Data and Key Metrics Changes - The container fleet generated gross charter hire of approximately $90 million, including about $2 million in profit share related to fuel savings [27] - The tanker fleet generated approximately $35 million in gross charter hire during the second quarter, down from approximately $47 million in the previous quarter [27] - The dry bulk carriers generated approximately $24 million in gross charter hire, with 8 out of 15 vessels employed on long-term charters [28] Market Data and Key Metrics Changes - The harsh environment semisubmersible rig Hercules commenced a contract with ExxonMobil Canada, with an estimated contract value of $50 million, implying a day rate of approximately $375,000 per day [8] - Day rates for harsh environment rigs are expected to exceed $500,000 per day, a 50% increase from the previous year, indicating a tightening supply-demand balance [9] Company Strategy and Development Direction - The company has transformed its business model from a maritime leasing company to a maritime infrastructure company, focusing on long-term time charters [42] - The fixed charter rate backlog stands at approximately $3.6 billion, providing strong cash flow visibility going forward [44] - The company is investing in fleet renewal and energy efficiency to comply with IMO carbon intensity indicators, which will impact operational profiles [23][52] Management's Comments on Operating Environment and Future Outlook - Management expects cash flow to improve significantly in the second half of the year, particularly due to the Hercules rig returning to service [2][62] - The company anticipates increased revenue from Q3 onwards, driven by the commencement of the Hercules contract and new car carriers being delivered [62] - Management noted that the market for harsh environment rigs is promising, with a strong outlook for day rates and cash flow generation [76] Other Important Information - The company has authorized a share repurchase program of up to $100 million, with approximately 1.1 million shares repurchased at an average cost of $9.27 per share [18][35] - The company has secured new financing arrangements exceeding $1 billion in 2023, ensuring a well-diversified funding platform [37] Q&A Session Summary Question: How should we think about potential dividend raises going forward? - Management indicated that cash flow will improve significantly in the second half of the year, which may allow for potential dividend raises [1][2] Question: What is the expected contribution from the Hercules rig and new car carriers? - Management expects a significant increase in revenue from the Hercules rig starting in Q3, with additional contributions from new car carriers in Q4 and Q1 [100][101] Question: How does the company view the current market environment for vessels? - Management noted that the market is currently neutral but expects activity on the Norwegian continental shelf to increase, potentially leading to higher contributions from rigs [40] Question: What are the company's thoughts on the recent changes in corporate law in Bermuda? - Management is monitoring the situation closely but does not foresee any immediate impact on the company [126]

Ole Hjertaker Ole Hjertaker It's a good question. I would say, any aspect -- I would say, in our shop, anything is for sale at the right price, if we think about it's beneficial for shareholders. But generally, I would say that those vessels are trading in the market and, of course, we did sell -- we did own seven Handy size dry bulk vessels in the past and we sold them and what we believe was at -- optimistically sort of good timing. So, for now, we keep these vessels, we keep trading them, and they genera ...

Dividends - SFL Corporation Ltd. declared a dividend of USD 0.24 per share, with shares trading ex-dividend on the NYSE as of March 14, 2023[13] Convertible Notes - The company adjusted the conversion rate for its outstanding senior unsecured convertible notes to 85.0332 as of March 14, 2023[14] - The total issue amount of the convertible notes is USD 164,000,000, issued on April 23, 2018, with a maturity date of May 1, 2023[14] - The coupon rate for the convertible notes is 4.875%[14]

Financial Adjustments and Dividends - The cumulative effect of adopting ASU 2020-06 resulted in a $4.3 million adjustment to opening retained earnings and a $5.9 million reduction to additional paid-in capital [623]. - During the year ended December 31, 2022, the company paid four dividends totaling $0.88 per common share, amounting to $111.6 million, compared to $0.63 per share and $77.6 million in 2021 [633]. Cash Obligations and Commitments - As of December 31, 2022, total contractual cash obligations amounted to $3,484.8 million, with $1,250.8 million due in less than one year [636]. - The company has commitments under shipbuilding contracts totaling $209.7 million for constructing four new dual-fuel car carriers [637]. Market Trends and Performance - The tanker market saw a 5.1% year-on-year increase in global seaborne crude trade, reaching 39.3 million barrels per day in 2022 [642]. - Average earnings for VLCC, Suezmax, and Aframax sectors in December 2022 were approximately $51,800, $83,900, and $100,300 per day, respectively [642]. - Crude tanker demand is expected to grow by 6.5% in 2023, while the fleet is projected to grow by only 1.9% [643]. - The dry bulk fleet increased by 2.8% in total deadweight tonnage (dwt) during 2022, while demand decreased by 1.9% in terms of tonne miles [644]. - The Shanghai Containerized Freight Index (SCFI) peaked at 5,110 in January 2022, but fell to 1,030 by January 2023, representing an 80% decline [646]. - Global seaborne container trade declined by 3.8% in 2022 to 200 million TEU, down from a 6.6% increase in 2021 [646]. - Trade between the Far East and Europe decreased by an estimated 10.3% in 2022 compared to 2021 [646]. Offshore Drilling and Fuel Consumption - Offshore drilling rig utilization improved from 78% in 2020 to 90% in early 2023 due to increased demand and lower supply [648]. - Global liquids fuel consumption is projected to rise from 99.4 million barrels per day in 2022 to 102.3 million barrels per day by 2024 [649]. - The offshore drilling market has faced volatility, with Brent crude prices fluctuating between $20 in 2020 and over $100 in 2022 [647]. Financial Instruments and Risk Management - Interest rates have increased recently, and the company has hedged a substantial portion of its floating rate debt through swap agreements [650]. - The fair value cost of options granted under the Share Option Scheme was $1.4 million in 2022, up from $1.0 million in 2021 [629]. Charter Agreements and Demolition Activity - The dry bulk vessels chartered to Golden Ocean are subject to long-term charters with fixed base charter hire and profit-sharing payments based on average daily rates exceeding fixed rates [645]. - Limited demolition activity in the container segment, with only 8 vessels sold for recycling in 2022 compared to 16 in 2021 [646]. Market Outlook and Caution - The company acknowledges that market developments may differ from current expectations and advises caution in predictions [651].

Financial Data and Key Metrics Changes - Total charter revenues for the fourth quarter were $208 million, representing a 17% increase compared to the third quarter [2] - Net income for the quarter was approximately $48 million or $0.38 per share, consistent with the previous quarter [14][101] - Adjusted EBITDA for the fourth quarter was approximately $135 million, up 7% from the previous quarter [21][55] - The company reported total operating revenue of approximately $198 million according to U.S. GAAP, which is less than the charter hire received due to various exclusions [68] Business Line Data and Key Metrics Changes - The tanker fleet generated approximately $49 million in gross charter hire during the quarter, compared to approximately $42.4 million in the previous quarter [6] - The dry bulk fleet generated approximately $23.7 million in gross charter hire, including approximately $400,000 of profit share [7] - The liner fleet generated gross charter hire of approximately $99 million, including approximately $6.5 million in profit share related to fuel savings [18] Market Data and Key Metrics Changes - The company has a strong charter backlog of approximately $3.6 billion, providing visibility on future cash flows [71][87] - The harsh environment semi-submersible rig Hercules is well-positioned to benefit from increased activity in the offshore drilling market [25][51] - The international market for deepwater drilling rigs is recovering, with promising prospects for 2024 and 2025 [51] Company Strategy and Development Direction - The company aims to maintain a diversified fleet and funding base, focusing on long-term charter contracts to enhance cash flow visibility [10][60] - The strategy includes selling older vessels and reinvesting in newer, more fuel-efficient vessels [91][93] - The company is evaluating new investment opportunities conservatively, particularly in light of rising interest rates [23][82] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the offshore drilling market and the potential for cash flow generation from the rigs [25][51] - The company anticipates that the cash flow from the rigs will contribute to dividends in the medium term [33][78] - Management noted that the current environment with rising raw material costs and inflation is beneficial for the company as it retains more residual value in assets [63] Other Important Information - The company declared a cash dividend of $0.24 per share, marking the 76th consecutive dividend, with a yield of approximately 9.3% [12][49] - The company raised a new $150 million sustainability-linked unsecured bond to refinance existing debt and for working capital [52][71] - The company has four LNG dual fuel car carriers under construction, with remaining capital expenditures of approximately $210 million [102] Q&A Session Summary Question: Regarding upgrades for the Hercules rig and associated costs - Management indicated that upgrades are necessary for compliance with specific contract requirements and to enhance the rig's capabilities [30][75] Question: Impact of the Hercules rig on dividends - Management stated that cash flow from the rig will be more significant if it secures long-term contracts, which could enhance dividend capacity [78][80] Question: Access to financing in a higher interest rate environment - Management noted that access to financing has improved, allowing for competitive financing options despite rising interest rates [114]

1 SFL Corporation Ltd. Q4 2022 presentation February 15, 2023 Forward Looking Statements This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including SFL management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although SFL believes that these assumptions were reasonable when made, because assumptions are inh ...

Financial Data and Key Metrics Changes - Total charter revenues for the quarter were $178 million, an increase of 8% compared to the second quarter [5] - EBITDA equivalent cash flow was approximately $126 million for the quarter, with a total of $489 million over the last 12 months [5] - Net income for the quarter was around $50 million, or $0.39 per share [5][34] - The announced dividend of $0.23 per share represents a dividend yield of approximately 8.8% [6] Business Line Data and Key Metrics Changes - The liner fleet generated gross charter hire of approximately $98 million, including about $10 million in profit share [26] - The tanker fleet generated approximately $42 million in gross charter hire, up from $35 million in the previous quarter [27] - The dry bulk fleet generated approximately $27 million in gross charter hire, including about $1.2 million of profit share [28] - Charter hire from drilling rigs was approximately $10 million, with expectations for full revenue from ConocoPhillips starting in the fourth quarter [29] Market Data and Key Metrics Changes - The fixed rate backlog increased to approximately $3.8 billion, providing strong cash flow visibility [7][25] - The charter backlog includes approximately $0.5 billion from 7 car carriers, with an average remaining charter term of about 4.7 years [26] Company Strategy and Development Direction - The company has shifted from a single asset class to a diversified fleet, with container vessels now representing the largest segment at 53% of the backlog [17] - The strategy focuses on maintaining a strong technical and commercial operating platform, allowing for a wider range of services to customers [21] - The company aims to retain more residual value in assets through time charters rather than bareboat charters, which benefits stakeholders [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market prospects for deepwater drilling rigs, particularly for 2024 and 2025 [15] - The company is considering upgrades to its rigs to enhance attractiveness for long-term contracts [16] - The management highlighted the importance of a conservative approach to financing, especially in light of rising interest rates [33] Other Important Information - The company has secured refinancing facilities for its vessels totaling $138 million and is in advanced discussions for additional financing [36][37] - The company has a book equity ratio of approximately 29% at the end of the quarter [37] Summary of Q&A Session - Due to technical issues, a question-and-answer session could not be conducted, and participants were encouraged to reach out via the company's website for any clarifications [39][40]