Welcome to SFL's Fourth Quarter 2023 Conference Call. My name is Sander Borgli, and I'm an Analyst in SFL. Our CEO, Ole Hjertaker, will kick off the call with an overview of the fourth quarter highlights. Then our Chief Operating Officer, Trym Sjølie, will comment on vessel performance matters; followed by our CFO, Aksel Olesen, who will take us through the financials. The conference call will be concluded by opening up for questions, and I will explain the procedure to do so prior to 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 include, 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 within the Securities and Exchange Commission for a more detailed discussion of risks and uncertainties, which may have a direct bearing on our operating results and our financial condition. Then I will leave the word over to our CEO, Ole Hjertaker, with highlights for the fourth quarter.

Thank you, Sander. We are now celebrating our 80th dividend, and have a unique profile as a maritime infrastructure company with a diversified fleet. The total charter revenues were $209 million in the quarter, and EBITDA was $132 million, which were in line with the third quarter. Over the last 12 months, the EBITDA equivalent has been $481 million. The net income came in at around $31 million in the quarter, or $0.25 per share. The net income was impacted by some one-off items in the quarter, including negative mark-to-market on hedging instruments and accounting effects on Hercules, which our CFO, Aksel Olesen, will explain in more details later in the presentation. In line with the improved results and commitment to return value to our shareholders, we are, again, increasing our quarterly dividend this time to $0.26 per share. We have now paid dividends every quarter since our inception in 2004, and this has accumulated to more than $30 per share, or nearly $2.7 billion in total. Our fixed rate backlog stands at approximately $3.2 billion. And importantly, this backlog is concentrated around long-term charters to very strong end users. And the backlog figure excludes revenues from the vessels traded in the short-term market, and also excludes future profit share optionality, which we have seen can contribute significantly to our net income. And with that, I will give a word over to our Chief Operating Officer, Trym Sjølie. Trym Sjølie: Thank you, Ole. We have 73 maritime assets in our portfolio, and our backlog from owned and managed shipping assets stand at $3.2 billion. The current fleet is made up of 15 dry bulk vessels, 36 container ships, 13 tankers, 2 drilling rigs and 7 car carriers, where 6 are on the water and 1 still under construction in China.…

Thank you, Trym. On this slide, we have shown a pro forma illustration of cash flows for the fourth 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 non-cash items. The company generated gross charter hire of approximately $209 million in the fourth quarter, with approximately 93% of the revenue coming from a fixed charter rate backlog, which currently stands at $3.2 billion, providing us a strong visibility on our cash flow going forward. In the fourth quarter, the container fleet generated gross charter hire of approximately $92 million, including approximately $3.4 million in profit share related to fuel savings on some of – seven of our large container assets. With five car carriers on charter, following the delivery of our second dual-fuel LNG car carrier in November, gross charter hire increased approximately $22 million in the fourth quarter, compared to approximately $9 million in the third quarter. Our tankers, our 15 tankers on long-term charters generated approximately $30 million in gross charter hire during the fourth quarter in line with the previous quarter. The company has 15 dry bulk carriers of which eight were employed on long-term charters. The vessels generated approximately $21 million in gross charter hire in the fourth quarter. Seven of these vessels were employed in the spot and short-term market, and contributed with approximately $7.3 million in the charter hire compared to approximately $6.2 million in the previous quarter. SFL owns two modern harsh environment drilling rigs, the large jack-up rig Linus and the semisubmersible ultra deepwater rig Hercules. During the fourth quarter, the rigs generated approximately $44.9 million in contract revenues compared to approximately $64.1 million in the third quarter. Linus is under long-term contract…

Thank you, Aksel. We will now open up for Q&A session. [Operator Instructions] Thank you. Our first question from Chris Wetherbee [Citi]. Please unmute your speaker to ask your question.

Okay, thanks. Good afternoon, guys. Appreciate the time here. I guess I wanted to first start off with across the portfolio as you’re looking out to 2024, where do you see the opportunities here? I guess, where would you be thinking about potentially deploying incremental capital to across the portfolio?

Thank you. We are looking pretty broad at the market opportunities in several segments. I would say many of the segments are fundamentally undersupplied. So there could be good growth opportunities. We have done quite a few deals on the tanker side. We’ll be happy to do more there, very low order books. We believe there is long-term sustainable growth opportunities there. We have done several car carriers recently with deliveries of new dual fuel vessels, also a market with good underlying growth, a long gap with very few new buildings for a period of around 10 years, structurally undersupplied and with significant growth, particularly out of China and where you have industrial counterparties who are willing to then look at longer charters. Same thing also on the liner side, generally on containers. Yes, there is a significant order book on some of the larger sizes. But as we have seen, the liner companies are very focused on efficiency. And you could look at – so even though there is a good order book, they could still be very interested in adding new capacity, both with the new fuels and with improved cargo capacity. So we are turning all the stones. I would say last year was a little slow generally. I mean, for two reasons. One, we saw an increase in new building prices, or you could call it replacement cost for assets and also a combination with interest rates coming upwards. And as we are discussing, of course, when we look at project opportunities, we also look at the cost of it, operating costs, the funding of it, et cetera. And it takes a little time when you have underlying fundamental factors moving upwards for that to filter into, call it our chartering counterparties decision mode. We think that is changing now. We think our discussions partners are taking in that it’s more of a long-term development and not the short-term sort of spike. And therefore, could be more open to do more business also at the levels that we see now. So we are optimistic on 2024, looking at multiple opportunities, but I can, of course, not comment on any of those until they are concluded.

Understood. Maybe I could follow up on the container side. So, I guess, maybe a two-part question here. So you noted maybe some interest on the chartering there. Could you maybe talk a little bit about what you’re seeing? A little surprising there, but I guess maybe there is the potential for some duration or bid in that market. And I guess maybe, in connection with that as you think about operational changes that you may see – you may be seeing from the liner companies in terms of how they’re handling some of the disruptions that are out there, whether it be Red Sea, Suez Canal diversions, or if it’s Panama Canal, low water levels, and even sort of East Coast potential labor issues later in the fall. I don’t know if you’re seeing specific changes from the way that these companies want to operate the vessels that could potentially lead to incremental capacity being put to work?

Yes. We – some of the companies out there on the liner side have – saw this exceptional windfall profits in particular in 2021 and 2022. And we’ve seen the market normalize more. Generally, I would say that the liner business has more similarities to the airline industry than the general shipping markets like tankers and bulkers. It’s all about efficiency. It’s all about cost per produced unit. And that is why now, when we also see longer transportation legs, caused by – it could be canal issues and other factors, it’s all down to using the most fuel-efficient vessels and where they are – and with fuel efficient, I mean, fuel efficient per produced box for the liner company because they are also measured on emissions, in addition to the costs that it is to transport this. So the modifications we did to some of our existing vessels is a good example. They are very modern vessels, electronic engine. They’re all designed after the financial crisis, so they are so-called wide beam designs. And we can, with a relatively modest investment, make them, I would say, effectively as good as a brand-new vessel that you would construct today with that engine configuration type. Of course, for liner companies, it’s also all about making sure that they are positioned for new fuels. So that’s also something that we would be very interested in looking at. But mindful that when we do that, we want some charter duration as it’s not set in stone quite yet. What will be the long-term, call it, fuel for the future. So, we would be happy to look at – we have some dual fuel LNG vessels in our fleet. We would be happy to look at methanol and other fuel types if we can work in cooperation with our customers. We have very strong vessel operations. I think what we hear from our customers is that they like our mindset, they like the way we focus on efficiencies every single day we have, and we try to make sure that we facilitate our customers with good long-term logistics assets.

Thank you, Ole. Our next question comes from Gregory Lewis [BTIG]. Please unmute to ask your question.

Yes, hey, good afternoon, everybody, and thanks for taking my question. I did want to talk a little bit about the asset portfolio. I'm always asking about the rigs, but I guess I first wanted to ask about the dry bulk fleet. I mean, it's a handful of vessels, asset prices seem firm. It's difficult to – it seems like it's difficult to find multi-year charters. Just kind of curious on your views on how the dry bulk assets fit into the portfolio and how you're thinking about those assets longer term? Trym Sjølie: Thank you. As you rightly say the – for the Supramaxes and the [indiscernible], there isn't really a lot of interesting long-term charter opportunities. That's why these vessels are being traded in the short-term market. We believe we have a robust setup to get maximum results out of that. And they've been trading okay and quite well. We think for a company like SFL, it would be perhaps wrong to say that these are strategic assets. When we're looking at new projects, it's very difficult to make sort of that kind of ships work in our model due to the lack of long-term charters available, at least at the moment. So regarding how long they will be in our portfolio, I think that depends on the market going forward. As we've shown before, we will – if the right market conditions prevail, we will sell them. But right now, I think on balance, it makes more sense to keep them. But of course, if we see a strong dry bulk market coming, then we might want to change our mind on that.

And as part of the thought process, just as I try to work through this, I mean, clearly the assets are fine, are doing fine and generating a return. Is part of the issue finding an opportunity to recycle that cash? Is that kind of what we need to be thinking about as kind of the trigger to monetize those assets?

Yes, absolutely. I mean for now, as Trym said, I mean, they're performing quite well. Most of these vessels are debt free, and they're generating quite good cash flow, even in today's not too exciting market. So of course, we enjoy that. But longer term, our mindset and as we have seen in the past, we've turned over, I mean, over the 20 years the company has been in business we have continuously sort of effectively recycled vessels by selling them after end of long-term charter periods or when we feel that they don't – they are not so easy to find long-term charters for, and then reinvested in other vessels where we can find, call it that dynamic. So our core focus is obviously on the modern vessels. We can put on long-term charters to very strong counterparties. And then we manage other vessels and try to optimize the return on those. So whether we continue to charter them and enjoy the cash flow or we dispose of them at some stage at the right price, that all depends on our market view at the time. But these vessels are relatively – it's a relatively small proportion of our fleet, both in terms of numbers, but certainly in terms of will it implied values and cash flow. So over time, we've always had I would say, sort of between 10% to 20% of our fleet effectively in the short-term market and I think right now we are maybe on the lower end of that percentage.

Thank you, Ole. Our next question comes from [indiscernible]. Please un-mute to ask your question.

Yes. Hello. Thank you for taking my question. First of all, another good quarter. Thank you very much, and thank you for the good prospects going forward. I wanted to ask about a geopolitical issue. Recently, there were problems in and around the Red Sea. And I'm wondering what effect that has on SFL's business? Do you see, for example, an increase in demand for more fuel efficient boats or could you go into a little detail on that, please?

Yes. Thank you. Yes. I mean, we have seen quite changing market dynamics relating to that. And I would say, also relating to the Panama Canal, where you have seen restrictions and reduction in capacity going through the canal due to draft issues in that region. So first of all, I mean, our vessels are on long-term charters. So our customers are paying their daily hire, I would say, irrespective of where the vessel goes, whether it goes – whether it used to go through the Suez Canal or whether these vessels went around Africa. And for our customers, that was also a question of economics and logistics. You’re taking a vessel through the Suez Canal, had some significant costs in canal dues. I mean just to be mindful of that. I mean, we talk about our ships – if you look at the country Egypt, I mean they used to have around $10 billion in canal fees as part of their revenue stream. And now that, of course, is dramatically reduced as a consequence of the turmoils and the deviation of the assets. So – but for our customers, they spend more days at sea, burning more fuel, and that is – you are absolutely correct. For them, it’s all about having the most fuel-efficient vessels as they now trade the [indiscernible] vessels longer. So – but we hope, of course that, that noise and – will succeed, and that we can return to a more normalized, call it, the transition level through that region. But I would say, in the near term, we don’t see so much direct impact on our numbers, because we don’t really have many vessels in the spot market that would normally trade through those areas.

Okay. Thank you.

Thank you. [Operator Instructions] As there are no further questions from the audience, I would like to thank everyone for participating in this conference call. If you have any follow-up questions to management, there are contact details in the press release or you can get in touch with us through the contact pages on our web page, www.sflcorp.com. Thank you.