On August 26, SFL Corporation Ltd. (NYSE:SFL) held its second-quarter earnings call, and the numbers explained why management sounded upbeat. Revenue climbed to $201 million from $174.5 million in the first quarter, while adjusted EBITDA rose 20% to $130 million. Net income reached $34 million, or $0.25 per share, up from $26 million the quarter before. The board also declared its 90th consecutive quarterly dividend, this one worth $0.22 per share. That kind of streak does not happen by accident.
Record Cash Flow Meets Bigger Backlog
Two aging Suezmax crude tankers did much of the heavy lifting. Freed from a long-term charter that paid around $30,000 per day, the vessels earned an average spot rate of $54,000 per day in the first quarter and then $133,000 per day in the second, more than $100,000 per day higher than the old charter rate. Management said 63% of third-quarter days are already booked at roughly $93,000 per day, so the windfall has not faded yet.
Car carriers added just as much to the story. SFL locked in new three-year charters on two 20-year-old vessels, the SFL Conductor and SFL Composer, adding $83 million to backlog, and ordered four dual-fuel newbuildings for about $360 million, two of which already carry five-year charters with an Asian automaker worth $150 million, rising to $300 million if an option is exercised. Chief Operating Officer Trym Sjølie pointed to “growth of the China volumes” as the demand driver behind the segment. Across the whole fleet, the charter backlog now stands at $3.8 billion, roughly 65% of it with investment-grade customers, and utilization hit 100% for car carriers and 99.3% for container ships. Since 2004, SFL has paid out more than $32 per share in dividends without missing a quarter.
Cracks Beneath The Booming Tankers
The spot market that made the quarter looks fragile by nature. Rates that jump from $54,000 to $133,000 per day in three months can fall just as fast, and the 63% coverage at $93,000 for the third quarter already hints at a cooler run rate ahead. GAAP complicates the picture further, since spot revenue is booked only when cargo is on board, so the final tally depends on how trading goes into the close of the quarter.
The energy segment tells a different story than the rest of the fleet. It ran at just 50% utilization because the Hercules rig sat warm-stacked awaiting its Canada contract, even as the Linus rig kept generating steady revenue under a deal running through May 2029. SFL also has $1.2 billion of remaining capital spending ahead across five container vessels and four PCTC newbuildings, and it ordered two of the new car carriers without charters attached, a departure from its usual practice, betting that shipyards being “sold out well into 2030,” as CEO Ole Hjertaker put it, will make it easy to find takers. To help fund the buildout, SFL issued 8.8 million new shares through its ATM and dividend reinvestment programs, raising $100 million, and it redeemed a $150 million bond in May 2026 using proceeds from a $75 million bond tap.
Wall Street Barely Blinks
Hedge fund ownership slipped to 24 funds holding SFL shares, down from 26 the quarter before, a modest pullback rather than a rush for the exits. Short interest sits at just 2.78% of the float, which signals little organized skepticism toward the stock. That combination suggest that investors are watching the spot rate swings rather than positioning aggressively in either direction.
Where The Real Bet Lies
SFL’s second quarter leaned heavily on two tankers catching a historic spot market, layered on top of a shipping business that keeps signing long-term car carrier and container charters. The 90th straight dividend and the $3.8 billion backlog show a company built for steady, contracted cash flow, but the quarter’s biggest gains came from the part of the fleet with the least predictability. For the bullish story to keep playing out, Suezmax rates need to hold up better than history suggests spot rates ever do, and the uncontracted car carrier newbuildings need charters to materialize while shipyard scarcity persists into 2030.
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