SFL .(US:SFL)2023-11-14 19:27Financial Data and Key Metrics Changes - Charter revenues for the quarter were $214 million, up 23% from the previous quarter, primarily due to the drilling rig Hercules returning to service [5] - EBITDA equivalent cash flow for the quarter was approximately $130 million, higher than the second quarter, with a total of $485 million over the last 12 months [5] - Net income for the quarter was around $29 million or $0.23 per share, influenced by one-off items including gains on a vessel sale and mark-to-market effects [6][34] - The company increased its quarterly dividend to $0.25 per share, marking a commitment to return value to shareholders [7][36] Business Line Data and Key Metrics Changes - The drilling rigs generated approximately $64 million in contract revenues in Q3, compared to $19 million in Q2 [30] - The container fleet generated gross charter hire of approximately $91 million, including $2.6 million in profit share related to fuel savings [51] - The tanker fleet generated approximately $30 million in gross charter hire during the third quarter, down from $35 million in the previous quarter due to scheduled dry dockings [52] Market Data and Key Metrics Changes - The fixed rate backlog stands at approximately $3.4 billion, providing strong visibility on future cash flows [27][60] - The overall utilization across the shipping fleet was 99% in Q3, while drilling rigs had an 80.5% utilization rate [25] Company Strategy and Development Direction - The company has transitioned from a maritime leasing model to a maritime infrastructure provider over the last 10 years, focusing on long-term charters to strong end users [2][22] - The fleet composition has diversified, with a significant portion now on long-term charters, reducing reliance on bareboat contracts [23][47] - The company aims to reduce carbon emissions through fleet renewal and investment in more efficient ships [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term market prospects for drilling rigs, citing positive tender activity and a tighter supply-demand balance [21] - The company anticipates lower revenues for Hercules in Q4 due to a long mobilization period, but expects strong revenue generation in subsequent quarters [58][60] - Management highlighted the importance of focusing on strong counterparties and avoiding desperation in deal-making during volatile market conditions [69][70] Other Important Information - The company fully repaid a Norwegian kroner-denominated bond loan of $48 million during the quarter [19] - The company has secured new financing arrangements of over $1 billion in 2023, enhancing its liquidity position [79] Q&A Session Summary Question: How does the company plan to manage dividend growth alongside the cyclical nature of the drilling rigs? - Management acknowledged the cyclical nature of the industry but emphasized the strong cash flow potential from the Hercules rig and other assets, indicating a focus on returning cash to shareholders [81][83] Question: What are the most interesting areas for potential deals looking forward? - Management indicated a focus on logistics-oriented deals, particularly in the car carrier segment, while remaining cautious about the container market due to its volatility [91] Question: How has the rising interest rate environment affected deal flow opportunities? - Management noted a decrease in overall deal volume but highlighted that higher borrowing costs could create opportunities for financing structures, particularly for strong counterparties [68][86]