Episode Details

SFL Corporation Ltd. (SFL) Q2 2026 — Q2 2026 (three months ended June 30, 2026): total operating revenues $200.8m vs $174.5m in Q1; net income $33.8m; basic and diluted EPS $0.25 vs a $0.14 consensus bar; adjusted EBITDA $129.9m including $7.8m from associates, up 19.9% on the quarter; 90th consecutive quarterly dividend of $0.22. Shares closed August 26 at $12.03, down 1.55% from $12.22 on 2,339,022 shares. SFL Corporation beat on both lines: EPS $0.25 against a $0.14 bar and revenue $200.8m against $179.7m expected, with adjusted EBITDA up 19.9% sequentially to $129.9m. The stock opened higher, ran to $12.75 intraday, then closed down 1.55% at $12.03. The reason is in the six-month interim report rather than the press release. SFL sells a $3.8bn fixed-rate charter backlog with 6.2 years of weighted term - and contracted TIME CHARTER revenue, the line that backlog actually describes, fell 13.8% year on year, from $312.5m to $269.4m. A $43.1m hole. Total revenue barely moved because VOYAGE CHARTER AND POOL revenue - the spot line, in no backlog, repriced every voyage - went from $9.4m to $46.3m and filled 86% of it. Two Suezmax tankers earning $133,000 a day did that. THE CALL: HOLD (3/5, A REAL BEAT DELIVERED BY THE QUARTER OF THE FLEET THAT IS IN NO BACKLOG) — base-case value ~$10.26 vs ~$12.03 today. KEY METRICS: - THE SPINE: six-month contracted time charter revenue fell 13.8%, $312.5m to $269.4m - a $43.1m hole in the one line the $3.8bn backlog describes. - THE FILL: spot voyage and pool revenue rose 4.9x, $9.4m to $46.3m, covering 86% of that hole. Total six-month revenue moved just -1.1%. - THE RATE: two Suezmax tankers averaged $133,000/day spot TCE; two Kamsarmax bulkers $16,000/day. Tanker charter hire jumped $16m on fewer operating days. - THE RIGS: Energy took $24.3m of revenue to $1.1m of adjusted EBITDA (4.7%) and a $19.3m net loss at 50% utilisation. Shipping: $176.5m to $121.0m (68.6%). - THE BRIDGE: Shipping earned $0.39/sh and Energy handed back $0.14/sh, to the filed $0.25. Basis proved: Q1 $0.20 + Q2 $0.25 = the filed half-year $0.45. - THE BOOK: net debt $2,271m vs a $1,668m market value; EV $3,940m = 8.38x normalised adjusted EBITDA of $470m; book value $7.47/sh, so 1.61x. - THE CALL: HOLD 3/5, fair value $10.26 vs $12.03 (-14.7%). An 8.0x asset multiple gives $10.74 and a dividend discount on $0.88 gives $9.78. Bull $14.17, bear $5.91. What to watch: UP: a genuine beat on both lines; adjusted EBITDA +19.9% sequentially; a 68.6% Shipping segment adjusted EBITDA margin; 65% of the backlog to investment grade counterparties over 6.2 years; the 90th consecutive dividend, covered 1.14x by earnings and 2.97x by operating cash flow; $273m of liquidity after redeeming a $150m bond and tapping $78m more at a 6.8% implied yield. DOWN: contracted time charter revenue -13.8% year on year; the spot line that replaced it is four vessels and a $133k/day rate that does not annualise; the Energy segment turned $24.3m of revenue into $1.1m of adjusted EBITDA and a $19.3m net loss at 50% utilisation; net debt of $2,271m against a market value of $1,668m; the share count rose 4.27% in one quarter; first newbuild delivery is 2028. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.