SFL .(US:SFL)2023-08-18 18:43Financial 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]