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Flex LNG Ltd. (“Flex LNG” or the “Company”) today announced its unaudited
financial results for the three months and nine months ended September 30, 2023.
Highlights:
- Vessel operating revenues of $94.6 million for the third quarter 2023,
compared to $86.7 million for the second quarter 2023.
- Net income of $45.1 million and basic earnings per share of $0.84 for the
third quarter 2023, compared to net income of $39.0 million and basic earnings
per share of $0.73 for the second quarter 2023.
- Average Time Charter Equivalent(1) (“TCE”) rate of $79,207 per day for the
third quarter 2023, compared to $77,218 per day for the second quarter 2023.
- Adjusted EBITDA(1) of $74.7 million for the third quarter 2023, compared to
$66.2 million for the second quarter 2023.
- Adjusted net income(1) of $36.1 million for the third quarter 2023, compared
to $28.2 million for the second quarter 2023.
- Adjusted basic earnings per share(1) of $0.67 for the third quarter 2023,
compared to $0.53 for the second quarter 2023.
- The Company declared a dividend for the third quarter 2023 of $0.875 per
share, consisting of a quarterly dividend of $0.75 per share and a special
dividend of $0.125 per share. The dividend is payable to shareholders on record
as of November 28, 2023 on or around December 5, 2023.
Øystein M. Kalleklev, CEO of Flex LNG Management AS, commented:
"After successfully completing our drydock program for the year during the
second quarter when we temporarily took out three ships for five-year special
survey in drydock, we had all 13 LNG carriers back in full operation during the
third quarter. Higher vessel availability coupled with a stronger spot market,
which positively impacted our single ship on a spot-market linked, variable rate
time charter, resulted in quarterly revenues increasing by $7.9m from $86.7m in
the second quarter to $94.6m in the third quarter. Hence, we delivered quarterly
revenues in the top end of our guidance of $90-95m.
Strong freight income also trickles down to healthy earnings with net income for
the quarter of $45.1m, equating to quarterly earnings per share of $0.84. Once
again, we recorded gains on our portfolio of interest rate swaps which is
hedging our cashflow against higher interest rates with gains of $15.7m
consisting of $6.7m of realized gains and $9m of unrealized gains. Since we
eliminate unrealized gains in our adjusted numbers, adjusted net income and
adjusted earnings per share were $36.1m and $0.67 respectively. We have been
ahead of the curve, hedging interest rate risk prior to Fed aggressively ramping
up rates and since beginning of 2021, we have in total recorded $128m of gains
on our interest rate swaps.
With seasonally stronger spot market heading into the winter season, we expect a
further increase in revenues in the fourth and last quarter of the year with
expected revenues of $97-99m. This is also in the high end of our guidance of
$90-100m. With the third quarter numbers presented today and the guidance for
fourth quarter, we are thus well on track to deliver on our revenue guidance for
the year of $370m, our adjusted EBITDA target of $290-295m and the overall
average Time Charter Equivalent guidance of $80,000 per day.
The overall freight and product market today ahead of the peak winter season is
fairly balanced. The LNG product market is well supplied as supply curtailments
have recently been limited despite the noise. That said, spot LNG prices remain
at about $15/mmbtu which still reflects a tight market with LNG being priced at
premium to crude oil which is somewhat unusual in historical context. As LNG
export growth will continue to be fairly muted the next two years, we do expect
the LNG product market to stay tight as European buyers will continue to be
buyers both of first and last resort. Active buying by Europeans also means
Atlantic cargoes will continue to be pulled towards Europe instead of Asia which
will put a dent on sailing distances in the near term. The spot freight market
will therefore continue to experience a very high level of volatility depending
on season. From the end of 2025 we do however see a wave of new LNG coming
onstream, and we expect these volumes to gradually alleviate market tightness
and make LNG affordable to consumers with shallower pockets. Consequently, with
newbuilding deliveries peaking at end of 2025, we do see incrementally tighter
shipping market from 2026 onwards. We therefore think our two fully open ships
in 2027 and two fully open ships in 2028 are attractively positioned for re-
contracting opportunities. This is particularly the case given the elevated
newbuilding prices which have pushed up term rates to very attractive levels for
owners of modern fuel-efficient tonnage.
Given our quadfecta of strong numbers, completed drydocking program, very solid
cash position of $429m and the compelling long-term outlook, the Board has
decided this time to declare a special dividend of $0.125 on top of our regular
quarterly dividend of $0.75 bringing the quarterly dividend per share for the
third quarter to $0.875. During the last twelve months, we have thus paid out
dividends of $3.375 per share which provides our shareholders with an attractive
annualized running yield of about 11 per cent."
Third Quarter 2023 Result Presentation
In connection with the earnings release, a video webcast will be held at today
at 15:00 CET (9:00 a.m. ET).
In order to attend the live video webcast use the following link:
Third Quarter 2023 Earnings Presentation (WN Event
registration/HJDVr09K/register)
A Q&A session will be held after the conference/webcast. Information on how to
submit questions will be given at the beginning of the session.
In conjunction with the quarterly results, we have published a short video in
which Øystein Kalleklev, CEO of Flex LNG, discusses the highlights of the third
quarter. The video can be accessed through the following link:
Link YouTube (https://www.youtube.com/watch?v=7vWciJfXrbY)
The presentation material which will be used in the live video webcast can be
downloaded on www.flexlng.com (http://www.flexlng.com) and replay details will
also be available at this website.
For further information, please contact:
Mr. Knut Traaholt, Chief Financial Officer of Flex LNG Management AS
Telephone: +47 23 11 40 00
Email: ir@flexlng.com
This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business. Forward-
looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance, and underlying assumptions and other
statements, which are other than statements of historical facts. The Company
desires to take advantage of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The words “believe,”
“expect,” “forecast,” “anticipate,” “estimate,” “intend,” “plan,” “possible,”
“potential,” “pending,” “target,” “project,” “likely,” “may,” “will,” “would,”
“should,” “could” and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management’s examination of historical operating
trends, data contained in the Company’s records and other data available from
third parties. Although management believes that these assumptions were
reasonable when made, because these assumptions are inherently subject to
significant uncertainties and contingencies which are difficult or impossible to
predict and are beyond the Company’s control, there can be no assurance that the
Company will achieve or accomplish these expectations, beliefs or projections.
As such, these forward-looking statements are not guarantees of the Company’s
future performance, and actual results and future developments may vary
materially from those projected in the forward-looking statements. The Company
undertakes no obligation, and specifically declines any obligation, except as
required by applicable law or regulation, to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. New factors emerge from time to time, and it is not
possible for the Company to predict all of these factors. Further, the Company
cannot assess the effect of each such factor on its business or the extent to
which any factor, or combination of factors, may cause actual results to be
materially different from those contained in any forward-looking statement.
In addition to these important factors, other important factors that, in the
Company’s view, could cause actual results to differ materially from those
discussed in the forward-looking statements include: unforeseen liabilities,
future capital expenditures, the strength of world economies and currencies,
general market conditions, including fluctuations in charter rates and vessel
values, changes in demand in the LNG tanker market, the impact of public health
threats and outbreaks of other highly communicable diseases, including the
length and severity of the COVID-19 outbreak and its impact on the LNG tanker
market, changes in the Company’s operating expenses, including bunker prices,
dry-docking and insurance costs, the fuel efficiency of the Company’s vessels,
the market for the Company’s vessels, availability of financing and refinancing,
ability to comply with covenants in such financing arrangements, failure of
counterparties to fully perform their contracts with the Company, changes in
governmental rules and regulations or actions taken by regulatory authorities,
including those that may limit the commercial useful lives of LNG tankers,
customers’ increasing emphasis on environmental and safety concerns, potential
liability from pending or future litigation, general domestic and international
political conditions or events, including the recent conflicts between Russia
and Ukraine, as well as the developments in the Middle East, including any
escalation of armed conflict in Israel and Gaza, which remain ongoing as of the
date of this press release, business disruptions, including supply chain
disruption and congestion, due to natural or other disasters or otherwise,
potential physical disruption of shipping routes due to accidents, climate-
related incidents, or political events, vessel breakdowns and instances of off-
hire, and other factors, including those that may be described from time to time
in the reports and other documents that the Company files with or furnishes to
the U.S. Securities and Exchange Commission (“Other Reports”). For a more
complete discussion of certain of these and other risks and uncertainties
associated with the Company, please refer to the Other Reports.
(1) Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss)
and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation
to the most directly comparable GAAP measure is included in the end of this
earnings report.
Kilde
