SFL Corporation Ltd

Welcome to SFL's first quarter 2026 conference call. My name is Espen Jørsson, and I'm vice president of investor relations in SFL. Our CEO, Ole Ertaker, will start the call with an overview of the first quarter highlights. Then, our chief operating officer, Trum Sjöli, will comment on vessel performance matters, followed by our CFO, Axel 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 US 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. Please note that 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 uncertainty, which may have a direct bearing on results and our financial condition. Then I will leave the word over to our CEO, Oli Aftaka, with highlights for the first quarter.

Thank you, Espen. We are pleased to announce our 89th consecutive dividend, and we have firmly positioned SFL as a maritime infrastructure company with a diversified high-quality fleet. For the first quarter, we reported revenues of $174 million and EBITDA equivalent cash flow of $108 million. Over the past 12 months, EBITDA amounts to $443 million, reflecting the continued strength and stability of our operations. Net income in the quarter was $26 million, or 20 cents per share, and dividend has been increased to 22 cents per share this quarter. In aggregate, we have now returned $3 billion, or more than $30 per share, in dividends since 2004. And we have a robust charter backlog of $3.7 billion, with a very strong counterparty profile, where more than two-thirds of the backlog is to customers with investment-grade credit rating. In the quarter, we announced a new contract for the ultra-deepwater harsh environment drilling rig Hercules, which would be employed in Canada from the first quarter of 2027. The firm part of the contract is 400 days and represents a backlog increase of approximately $170 million. There are also shorter options in addition to that, which could extend the contract beyond the 400 days. Generally, we see a significant demand for harsh environment, deep-water-capable, semi-submersible drilling rigs towards the end of the decade and believe this contract could position the rig attractively for prospective drilling campaigns in harsh environment areas. It is the only rig in the market with a valid Canadian safety case and has previously also worked in Norway and Namibia. This last quarter, we have also had the pleasure of having two 2020 built Suezmax tankers employed in a booming spot market. You may remember that we agreed to release the charters on these vessels against the compensation of $11.5 million per vessel in December last year, instead of selling the vessels in the market to a third party. We used to have four vessels to the same charterer, and we sold the other two older vessels with net cash proceeds after debt repayment of approximately $52 million in aggregate. So just for the compensation to terminate the charters on the newer vessels, we took nearly $30 million cash off the table. The vessels are currently traded in the spot market, and the market has strengthened significantly since the deal was concluded in December. In fact, net cash flow contribution is no higher from these two vessels alone compared to all four vessels in the original charter arrangement. We reported nearly $54,000 per day on a time charter equivalent basis in the first quarter, which compares to a cash break even below $20,000 per day after debt service. But this is dwarfed by the earnings into the second quarter, where we have experienced a historically strong market on the back of market disruptions caused by the war in the Middle East. So far, we have covered 53% of vessel days at an average charter rate of around $185,000 per day. But please note that reported charter hire from vessels in the sport market is accounted for on a low-to-discharge basis pursuant to U.S. GAAP. We therefore expect the average for the full quarter to be lower than the booked revenue so far due to expected ballast days in the remainder of the quarter. Also, the spot market is lower than the chartered we have booked so far this quarter, but still we expect a very firm quarter in the second quarter. While we are enjoying phenomenal cash flows from these vessels right now, we will look for new longer-term charter opportunities in due course. Recently, we also successfully raised $77.6 million in a TAP issue over 2030 senior unsecured bond loan, where we issued $75 million at a price of 103.5 of par value. The original bond loan has an interest rate of 7.75%, and we are pleased to see an implied interest rate in the TAP issue of only 6.8%. This TAP issue was not planned, but something that came about after reversing priorities from bondholders who wanted to increase their exposure to SFL at premium pricing. So we decided to act opportunistically in the situation, and the transaction was executed on very short notice. And with that, I will now handle the call over to our Chief Operating Officer, Trim Shirley.

Thank you, Ola. We have a diversified fleet of assets charted out to first-class customers on mostly long-term charters, and the majority of our customer base is large industrial end users. Following the sale of two Suez Maxis, the SFL Ottawa and Q4 last year, and SFL Telon, which was delivered to its new owners in February, our current fleet stands at 57 maritime assets, including vessels, rigs, and contracted new buildings. Our backlog from owned and managed shipping assets stands at approximately $3.7 billion, and the fleet is made up of two dry bulk vessels, 30 container ships, 16 large tankers, two chemical tankers, seven car carriers, and two drilling rigs. Two-thirds of our contracted revenue is with investment-grade counterparties, which gives us a high degree of confidence in the earnings visibility of this portfolio, even in a volatile market environment. Our charter backlog is mainly derived from time charter contracts. And with the exception of four contract container ships on bare boat leases, the rest are on time charter or operating in the short term or spot market. Charter revenue from our fleet was about $174 million in Q1. And we had a total of 4,598 operating days across the fleet in the quarter. Utilization was strong across most segments, as container vessels ran at 100%, car carriers at 100%, and tankers and dry bulk came in at 99%. The energy segment ran at 50%, reflecting that our Hercules rig remains warm-stacked in Norway in preparation for its new contract. OPEX for the shipping fleet came in at $42 million in Q1, broadly in line with the budget. And this quarter, we had three Maersk S-class container vessels in or completing dry dock. The Maersk Sarat, Maersk Schivling, and Maersk Skarsten, all undergoing significant upgrades under the new five-year charter agreements with Maersk. This is part of our ongoing effort to maintain and improve the quality and earning capacity of our assets over the long term. I will now give the word over to our CFO, Axel Olsson, who will take us through the financial highlights of the quarter.