Flex LNG - Third Quarter 2024 Earnings Release

HAMILTON, Bermuda, Nov. 12, 2024 /PRNewswire/ -- Flex LNG Ltd. ("Flex LNG" or the "Company") today announced its unaudited financial results for the nine months ended September 30, 2024.

Highlights:

* Vessel operating revenues of $90.5 million for the third quarter 2024, compared to $84.7 million for the second quarter 2024.

* Net income of $17.4 million and basic earnings per share of $0.32 for the third quarter 2024, compared to net income of $21.8 million and basic earnings per share of $0.41 for the second quarter 2024.

* Average Time Charter Equivalent ("TCE") rate of $75,426 per day for the third quarter 2024, compared to $72,385 per day for the second quarter 2024.

* Adjusted EBITDA of $70.4 million for the third quarter 2024, compared to $63.2 million for the second quarter 2024.

* Adjusted net income of $28.7 million for the third quarter 2024, compared to $30.4 million for the second quarter 2024.

* Adjusted basic earnings per share of $0.53 for the third quarter 2024, compared to $0.56 for the second quarter 2024.

* In September 2024, the new $270 million bank facility financing Flex Aurora and Flex Ranger was completed, and the previous $375 million bank facility was repaid in full. Consequently, the Flex Endeavour was unencumbered at end of Q3-2024.

* In October 2024, we closed the new $160 million JOLCO lease for Flex Endeavour, and thereby completing the $430 million in new financings according to plan with net proceeds of about $97 million.

* In November 2024, we signed an amendment under the Flex Enterprise $150 million Facility to convert the non-amortizing term loan tranche of $83.7 million to a non-amortizing revolving credit facility. The Company's revolving credit facility capacity has therefore increased from $330.0 million as at September 30, 2024 to $413.7 million.

* In November 2024, the charterer of Flex Courageous and Flex Resolute, agreed to amend and extend by way of addendum to the existing time charters, to include a new firm period from 2029 to 2032 following the last two-year option under the original time charter contract. The addendum includes additional options for the Charterer to extend each vessel by up to seven years in periods of two years, two years and three years.

* In November 2024, the charterer of Flex Constellation sent notice that they will not utilize their extension option under the time charter. The vessel is expected to be re-delivered from the existing contract late in the first quarter of 2025. Following the re-delivery, the vessel will be marketed for short and long-term contracts.

* The Company declared a dividend for the third quarter 2024 of $0.75 per share. The dividend is payable on or about December 11, 2024 to shareholders, on record as of November 27, 2024.

Øystein M. Kalleklev, CEO of Flex LNG Management AS, commented:

"Third quarter results came in as expected. Revenues were $90.5 million in line with guidance of ~$90 million, Adjusted EBITDA was $70.4 million, spot on guidance of ~$70 million and our average Time Charter Equivalent (TCE) rate was $75,426 per day, also in line with guidance of $75,000 to 77,000 per day. Adjusted Net Income, where we only include realized gains and losses on derivatives, came in at $28.7 million, corresponding to an adjusted Earnings Per Share (EPS) of $0.53. The slump in interest rates during the third quarter on the back of the sharp interest rate cut by Fed, adversely affected our ordinary earnings due to $10.5 million in unrealized losses on interest rate swaps. However, we utilized this window to significantly increase our hedging duration at a favourable time and recouped more than the third quarter unrealized loss just in the month of October alone.

During this winter season, the freight market has come under pressure due to a combination of high fleet growth, relatively small arbitrage between Europe and Asia, marginal intra-month arbitrage disincentivizing floating storage while export volume growth remains lacklustre at about 1%. Hence, we have seen spot rates behaving totally different from the seasonal norm in the fourth quarter with spot rates for modern tonnage being pushed down to the $20,000s where you effectively trade steam tonnage out of the market. As we have 100% charter coverage for the year and a substantial backlog, our exposure to the spot market is limited to one ship, Flex Artemis, on a variable Time Charter linked to the spot market rates. Hence, we expect only marginal changes in the fourth quarter with revenues expected to come in close to $90.0 million versus $90.5 million in the third quarter.

We are also pleased to announce additional backlog with the extension of Flex Courageous and Flex Resolute. These two LNG carriers commenced a 3+2+2 year time charter with a supermajor during first quarter of 2022, where the charterer during the first quarter utilized its first extension option from 2025 to 2027. We have now agreed an amendment of the time charter where we have added a firm three-year period from 2029 to 2032 and where the charterer has the right to extend the time charter for additional periods until 2039. Since reporting in August, we have executed the announced $430 million refinancing where we have improved our overall financing terms while at the same time raising net cash proceeds of $97 million. As we closed the last JOLCO financing of Flex Endeavour on October 3, our pro-forma cash following this refinancing subsequent to quarter-end was $450 million.

The Board has decided to declare once again an ordinary dividend per share of $0.75. This is the thirteenth consecutive time we have paid an ordinary dividend of $0.75 per share. We have also during this period paid special dividends on three separate occasions underlining the stability of our business. This dividend corresponds to an annualized dividend yield of approximately 13% which we do hope will make it attractive for our investors to stay invested in Flex LNG. Our dividend continues to be supported by strong financial performance, a solid financial position coupled with a substantial backlog with minimum charter backlog of 50 years which may grow to 82 years in the event charterers utilized all their extension options."

Third Quarter 2024 Result Presentation

In connection with the earnings release, a video webcast will be held at today 15:00 CET (09:00 a.m. EST).

In order to attend the live video webcast use the following link:

Third Quarter 2024 Earnings Presentation

A Q&A session will be held after the 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 teaser with the highlights of the third quarter. The video can be accessed through the following link:

YouTube 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.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbour 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 harbour provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbour 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, 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 war between Russia and Ukraine, as well as the developments in the Middle East, including continued conflicts between Israel and Hamas and the conflict regarding the Houthi attack in the Red Sea, 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.

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SOURCE Flex LNG