SFL .(US:SFL)2023-02-15 18:58Financial 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]