Earnings Labs

SFL Corporation Ltd. (SFL)

Q3 2022 Earnings Call· Mon, Nov 14, 2022

$11.40

+2.06%

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Transcript

Ole Hjertaker

Operator

Hi, everyone, and welcome to SFL's third quarter conference call. We do apologize for the problems with our service provider who has delayed the call now for more than 20 minutes. But I hope you have been patient and are able to listen in to us still. I will start the call by briefly going through the highlights of the quarter. Following that, our CFO, Aksel Olesen, will take us through the financials, and the call will be concluded by opening up for questions. Our Chief Operating Officer, Trym Sjølie will also be present for the Q&A session. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. Forward-looking statements are not guarantees of future performance. These statements are based on our current plans and expectations and are inherently subject to risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ includes, but are not limited to, conditions in the shipping, offshore and credit markets. You should therefore not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion on our risks and uncertainties, which may have a direct bearing on our operating results and our financial condition. The total charter revenues were $178 million in the quarter, which was up 8% compared to the second quarter. The maturity of revenues was from vessels on long-term charters and around 18% for vessels deployed on short-term charters…

Aksel Olesen

Analyst

Thank you, Mr. Hjertaker. On this slide, we have shown a pro forma illustration of cash flows for the third quarter. Please note that this is only a guideline to assess the company's performance and is not in accordance with U.S. GAAP and also net of extraordinary and noncash items. The company generated gross charter hire of approximately $178 million in the third quarter, including approximately $11 million of profit share, with approximately 82% of revenue coming from our fixed charter rate backlog, which currently stands at $3.8 billion, providing us with strong visibility on our cash flow going forward. In the third quarter, the liner fleet generated gross charter hire of approximately $98 million, including approximately $10 million in profit share contribution related to fuel savings on some of our large container vessels. At the end of the third quarter, the SFL fleet backlog was approximately $2 billion with an average remaining charter term of approximately 4.7 years or 7.4 years, if weighted by charter hire. The charter backlog includes approximately $0.5 billion of backlog from 7 car carriers. In the third quarter, SFL has a fleet of 18 crude oil products and chemical tankers, with the majority employed on long-term charters. Our tanker fleet generated approximately $42 million in gross charter hire during the quarter compared to $35 million in the previous quarter as well as 2 Suezmax tankers and 2 small chemical tankers trading in the spot and short-term markets. The charter hire from these vessels was approximately $11.5 million in the third quarter compared to approximately $6.6 million in the second quarter. The company has 15 dry bulk carriers, of which 9 were employed on long-term charters during the quarter. SFL generated approximately $27 million in gross charter hire from the dry bulk fleet in the…

Ole Hjertaker

Operator

And then I would like to thank everyone here who has helped us prepare the material for the third quarter. Unfortunately, due to the technical issues with the service provider, it's not possible to conduct a question-and-answer session. So I will ask anyone who has questions who want anything clarified to contact us either through our webpage on the contact page of our webpage, www.sflcorp.com. And also, there are contact details direct to several persons in the press release that you can reach out to, to get these answered. So with that, I would like to wrap up the conference call, and I promise you this technical issues we expect will not be there next quarter. Thank you. End of Q&A: