SFL Corporation Ltd (NYSE:SFL) Q4 2019 Earnings Conference Call - Final Transcript

Feb 18, 2020 • 10:00 am ET

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SFL Corporation Ltd (NYSE:SFL) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] The first question comes from the line of Greg Lewis. Please ask your question.

Analyst
Greg Lewis

Yes, thank you and good afternoon everybody.

Executive
Ole B. Hjertaker

Yeah, hi.

Analyst
Greg Lewis

Just given some of the macro news we're hearing around coronavirus and force majeure, I guess it would be helpful if you could, Ole, kind of walk us through, I guess, does any of your backlog, is it exposed, whether it's on the dry bulk or maybe the liner side in the event that ships cannot call on ports, is there any potential for your charters allowing for any type of force majeure?

Executive
Ole B. Hjertaker

Thank you. None of our charters are specifically sort of going to call it sort of Chinese ports where we are subject to such effects. So when we have chartered vessels to for instance liner companies, we cannot direct whether they trade them in China or they trade them somewhere else and therefore also, we don't have any specific force majeure effects if there are any delays or if there are effects around call it, what's going on in the Chinese market right now and the delays we see. It's a little different on shipyards we have heard. We have not experienced it, but we've heard it also for equipment production et cetera, but for now we have not seen any effect on us, We have some vessels that are being dry docked. We have one that is on its way out of Chinese shipyard. Tomorrow is the latest container ship. Things have been going slower than expected, but we are talking a few days. We're not talking a very big effect and also economic effect there is limited for us because we are sharing that with our customer, but we expect to see more rescheduling of dry dockings you know where some of that will be pushed later into the year, I believe is likely given the near-term uncertainty on activity level in China. We, of course, we watch the news and it looks like there are some encouraging signs that it seems to reduce -- at least the growth rate is slowing and hopefully they can get it under control and we get the Chinese economy and activity back on track.

Analyst
Greg Lewis

Okay, great. And then just one more for me around the dividend, I mean clearly you guys have done a good job of returning cash to shareholders. As we kind of think about it, and I believe it in the prepared remarks mentioned kind of targeting or thinking about 9%, 10% yield, how should we think about just looking at the balance sheet, clearly there's liquidity capacity for growth, but they're also -- looks like based on cash flows, there is the ability to increase the dividends. How at least is the company thinking about potentially revisiting the dividend in 2020? Is it a function of equity? Is it a function of cash flow? Is it a little bit of everything? How is SFL kind of thinking about maybe increasing