Flex LNG - First Quarter 2023 Earnings Release
May 16, 2023
Flex LNG Ltd. ("Flex LNG" or the “Company”) today announced its unaudited financial results for the three months ended March 31, 2023.
* Vessel operating revenues of $92.5 million for the first quarter 2023, compared to $97.9 million for the fourth quarter 2022.
* Net income of $16.5 million and basic earnings per share of $0.31 for the first quarter 2023, compared to net income of $41.4 million and basic earnings per share of $0.78 for the fourth quarter 2022.
* Average Time Charter Equivalent1 ("TCE") rate of $80,175 per day for the first quarter 2023, compared to $81,699 per day for the fourth quarter 2022.
* Adjusted EBITDA1 of $72.5 million for the first quarter 2023, compared to $79.1 million for the fourth quarter 2022.
* Adjusted net income1 of $35.2 million for the first quarter 2023, compared to $54.5 million for the fourth quarter 2022.
* Adjusted basic earnings per share1 of $0.66 for the first quarter 2023, compared to $1.02 for the fourth quarter 2022.
* In March 2023, we completed our Balance Sheet Optimization Programme which has resulted in the re-financing of all ships in our fleet over a 16 month period which has increased the our cash balance by approximately $382.4 million after all fees and expenses, extended the maturity profiles to the earliest in 2028 and reduced interest margins. Most recently:
- In February 2023, we completed a $330 million 10-year sale and leaseback with an Asian-based lease provider for the vessels, Flex Artemis and Flex Amber.
- In March 2023, we completed a $180 million 10-year sale and leaseback with an Asian-based lease provider for the vessel, Flex Rainbow; and
- In March 2023, we completed a $290 million term and revolving credit facility with margin of 1.85%, 6 year tenor and a 22 year age-adjusted repayment profile.
* As per date of this report, the Company has SOFR and LIBOR based interest rate swaps with aggregate notional principals of $660 million and $160 million, respectively. The weighted average SOFR interest rate is 1.81% with weighted average duration of 5.3 years. While the weighted average LIBOR interest rate is 0.96% with a weighted average duration of 2.0 years.
* The Company declared a dividend for the first quarter 2023 of $0.75 per share.
Øystein M Kalleklev, CEO of Flex LNG Management AS, commented:
“We are today publishing our first quarter 2023 results and we are pleased to announce that revenues came in at $92.5 million, spot on our guidance of $90 to $93 million. This resulted in adjusted earnings per share of $0.66 for the quarter. As we completed the balance sheet optimization program during the first quarter, we had some additional financing costs in our accounts for the first quarter. However, we have now put in place new attractive long-term financing for all our thirteen ships boosting our cash balance to $475 million at quarter-end or about $9 per share.
Given our very strong financial position and our extensive charter backlog with a minimum of ~57 years remaining contractual backlog, the Board has therefore once again declared an ordinary quarterly dividend of $0.75 per share. During the last twelve months, we have thus paid out $3.75 of dividend per share which should provide investor with an attractive annualized yield of about 11 per cent.
We have now also completed our two first scheduled dry-docking of the LNG carriers Flex Enterprise and Flex Endeavour being docked during March and April respectively. We are pleased to say that these dry-dockings have been carried out according to both time and costs while minimizing off-hire periods. During the second quarter we will carry out the two last drydocking for the year. Revenues are therefore expected to pick up in the second half of the year when the drydocking program for the year is expected to be completed by end of June.
We also re-affirm our guidance for the year. Despite off-hire in connection with four ships carrying out dry-docking, we do expect revenues to increase from $348 million in 2022 to about $370 million for 2023. The average Time Charter Equivalent Rate for the fleet is expected to come in at about $80,000 per day for 2023 in line with the $80,175 per day we delivered in the first quarter.
While the spot market right now is at a seasonable low, we maintain a positive long-term view. Our exposure to the spot market is also limited to one of the thirteen ships which is on a variable time charter where earnings are typically higher in the winter season. Our first fully open ships are not open before 2027 and with newbuilding prices are now exceeding $260 million for ships with deliveries in 2027 this is putting upward pressure on charter rates. Hence, we believe Flex LNG continues to be very well positioned for opportunities to re-contract our ships for longer periods at higher rates in the near future, like we have evidenced in the past.”
First Quarter 2023 Result Presentation
In connection with the earnings release, a video webcast will be held at today at 15:00 CEST (9:00 a.m. EST).
In order to attend the live video webcast use the following link:
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:
The presentation material which will be used in the live video webcast can be downloaded on 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: [email protected]
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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, 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.