SFL Corporation Ltd. Q1 2026 Preliminary Results Summary
Business Context and Reporting Period
This Form 6-K filing, dated May 12, 2026, reports preliminary financial results for SFL Corporation Ltd. for the quarter ended March 31, 2026. SFL operates a diversified fleet of vessels and drilling rigs, with revenue streams split between shipping (approximately 87%) and energy (approximately 13%). The company declared its 89th consecutive quarterly dividend, increasing the payout to $0.22 per share.
Key Financial Metrics
| Metric | Q1 2026 | Q4 2025 |
|---|---|---|
| Total Operating Revenues | $174.5 million | $175.5 million |
| Adjusted EBITDA | $108.4 million | Not explicitly stated in text |
| Net Income (GAAP) | $26.1 million | $(4.7) million |
| Earnings Per Share (Basic) | $0.20 | $(0.04) |
| Cash and Cash Equivalents | $127.6 million | $150.8 million |
| Total Available Liquidity | $288 million | Not explicitly stated |
| Fixed Rate Charter Backlog | $3.7 billion | Not explicitly stated |
Debt and Financing: Total interest-bearing debt (short and long term) was approximately $2.5 billion ($723 million short-term + $1.78 billion long-term). The company refinanced the Linus rig with a $150 million term loan and secured a $100 million revolving credit facility for the Hercules rig. Subsequent to quarter-end, a $75 million bond tap issue was completed.
Material Changes vs. Prior Period
- Profitability Turnaround: The company returned to profitability with $26.1 million in net income, compared to a net loss of $4.7 million in Q4 2025. This improvement was driven by a $11.5 million gain on the sale of the SFL Thelon tanker, positive mark-to-market effects on derivatives ($2.5 million), and equity investments ($1.9 million).
- Revenue Composition: Total operating revenues remained relatively flat at $174.5 million compared to $175.5 million in the prior quarter. Shipping revenues were $151.5 million, while energy revenues were $23.0 million.
- Operating Expenses: Total operating expenses decreased slightly to $129.6 million from $132.0 million in Q4 2025, primarily due to lower vessel operating expenses ($67.6 million vs. $71.0 million).
- Cash Flow: Net cash provided by operating activities was $34.1 million, a decrease from $51.6 million in Q4 2025. Investing activities provided $40.9 million, largely due to vessel sale proceeds of $48.3 million.
Outlook, Management Commentary, and Risks
Operational Highlights:
- Contract Wins: Secured a $170 million drilling contract for the semi-submersible rig Hercules, expected to commence in Q1 2027 with a minimum term of 400 days.
- Spot Market Performance: Suezmax tankers achieved an average daily spot TCE of approximately $54,000, while Kamsarmax dry bulk vessels achieved $10,700.
- Utilization: Container and Car Carrier fleets maintained 99-100% utilization. Tanker utilization was 100%, while Energy rig utilization remained at 50%.
Capital Allocation:
- Dividend: Increased quarterly cash dividend to $0.22 per share.
- Share Programs: Renewed share repurchase program (up to $100 million through June 2028) and ATM offering program (up to $100 million).
- Capex: Remaining commitments for five new container vessels are approximately $850 million, with an additional $21 million for existing asset upgrades.
Risks and Contingencies:
- Market Volatility: The seaborne transportation industry is cyclical and volatile, subject to fluctuations in charter hire rates and vessel values.
- Energy Transition: Accelerated climate change transition could negatively impact demand for oil transportation and drilling.
- Geopolitical Factors: Risks include political instability, international sanctions, hostilities, and potential physical disruption of shipping routes.
- Counterparty Risk: Performance of charterers and counterparties, including potential restructuring.
Key Facts for Investor Verification
- Dividend Sustainability: Verify the company's ability to maintain the increased $0.22 dividend given the $26.1 million net income and $34.1 million operating cash flow against the $26.6 million in dividends paid in the quarter.
- Non-Recurring Gains: Assess the impact of the $11.5 million one-time gain on vessel sale on the reported net income; core operating income was $56.4 million.
- Debt Refinancing Terms: Review the specific terms and interest rates of the new $250 million credit facilities for the Linus and Hercules rigs.
- Backlog Quality: Confirm the creditworthiness of the 68% of the $3.7 billion backlog attributed to investment-grade customers.
- Capex Funding: Monitor the funding strategy for the $850 million remaining capital expenditure on newbuildings scheduled for 2028 delivery.