Q3 2025 Flex LNG Ltd Earnings Call

We have fixed our good vessel Flex constellation and she is now fully employed until 2041.

In some, we have a solid contract, backlog with 80% of available days covered next year.

This protect us from a softener turn Market.

As you will see, later in the presentation, our contract profile is well positioned to benefit, the increasing LD, volumes coming on stream.

Looking at our guidance for the full Financial year of 2025, we expect 2025 revenues to come in around 340 million.

We expect the TC per day of around 71 to 72,000 per day.

looking at our digestive beta, we expect this to come in around, 250 million dollars

We are committed to maintaining a shareholder. Friendly dividend policy and delivering attractive shareholder returns.

We have transparent framework for dividend payouts. These include earning visibility contract backlog, balance sheet, strength and debt maturity profile.

We have made a small adjustment to our set of decision. Factors the backlog. And visibility is now going from dark green to light green.

This reflects having 2 vessels open in 2026, which we are actively marking that said, we have comfortable with 53 years of minimum firm backlog, but we find it prudent to make adjustment to this scorecard.

The board has declared an ordinary quarterly dividend of 75 cents per share.

The dividend will be paid out about 11 of the December for shareholders on record by 28 of November.

Before handing out, I want to give a sincere thank you to our crew on board, our vessels and our technical team for completing the 4 scheduled dry dockings in 2025 in a safe and efficient manner.

With no ltis. This is very impressive work and we have completed all of our special survey in less than 20 days each.

The average cost of docking was 5.6 million reflecting that we had 1, dry docking, taking place in Europe, which is more expensive than Singapore.

In 2026, we will complete 3, dry dockings Flex, volunteer will be x-ray, Rock mid January, whereas Flex freedom. And flex Vigilant will be dry docking in the first half of 2026.

With that, I think it will hand it over to yut.

Thank you, Mario.

So, as mentioned revenues for the third quarter came in at 8 5. 7 3,

This translates into time Charter equivalent of 70,900 per day.

The soft mark.

The soft spot.

impacting the earnings from

H, consolation and flex optimist.

We have also completed the dry docking of 2 vessels, namely flex automates and flex Amber in the third quarter reducing the number of available days. While this is offset by Flex Resolute and flex. The ra returning to service after Dry Dock,

The operating expenses came in at 1 8. 8 5,

Russell locks for the first 9 months of the year is 15,500. Uh, hence in line and spot on with our fulia guidance of 15,500.

On the interest expenses, we are now materializing. The benefits from lower base rates, improved terms under our financings interest rate hedge management and utilization of our RCF capacity.

even though we have added new depth,

These are done at improved terms; hence, interest expenses are reduced compared to the previous quarter.

But, uh, notably and as highlighted here, the interest expenses for the first 9 months of the year is down 10 million compared to last year.

We expect to see further positive impacts as our new financing, in particular, the attractive leases for the Flex, Graces, and Flex the Salute, are materializing into the P&L.

During the quarter, we refinanced Flex Resolute and flex constellation.

The old financings.

Our interest rate portfolio delivers a realized cash gain of $4.1 million, which is offset by $4.3 million in unrealized losses as a result of falling mid- to long-term interest rates.

Consequently, we have a net loss on derivatives of $200,000, for the quarter.

As a reminder, our swap portfolio has a notional value of 700, and 775 million with an average duration of 3 years.

6 that an average interest rate of 2.5%.

Since January 2021, this portfolio has generated unrealized and realized gains of $130 million.

So, uh, in some cases, this results in a net income of $16.8 million or earnings per share of 31 cents.

Adjusting for the unrealized losses from derivatives and the refinance cost adjusted nothing, come came in at 23.5 million or adjusted earnings per share of 43 cents.

In Q3, we generated $43 million from operations and released $2 million in working capital adjustments.

With uh, the 8 million in Dry, Dock expenditures, we generated approximately 37 million in net, operating cash flow.

We paid $23 million in scheduled debt installments. And as you can see, we realized $93 million in net proceeds from the refinancing of Flex, Resolution, and Flex Constallation.

We also paid out 41 million in dividends to our shareholders, which then leaves us with an all-time high cash balance of 479 million at the end of the third quarter.

So, let's have a look at our balance sheet.

With the new attractive financing in place, freeing up additional liquidity, we have fortified our balance sheet even further.

As you can see, the balance sheet is clean with cash and ships. Our Fleet is Young and ordered at the right point in the cycle. The financing is a mix of long-term leases and bank that which is split in term loans and non-advertising revolving credit facilities which provides us with a lot of financial flexibility.

We are managing the interest rate risk with the derivative hedging as mentioned.

uh, but we have also fixed rate, leases, which together provides us with the Hedge ratio of 70%, not of utilization of the RCF,

So to summarize, we maintain our Fortress balance sheet with Revenue. Visibility from our contract backlog and put cash position, limited capex, liabilities and no debt maturity prior to 2029.

That gives us, uh, financial and commercial flexibility to manage more market exposure and the current LNG shipping market.

And with that, I hand it back to you margis.

Thank you.

This book Market was in doldrums at the start of the Winter Market in Q3. However, in recent weeks we have seen a positive shift in the spot Market spot rates for more than 2 Strokes are currently quoted at around 70,000 per day.

I would like to highlight some of the factors causing these day rate movements.

we are seeing a record lnd volumes on the water with record number lift, things coming out to the US with almost 10 million tons exported in October,

Is not just in US LNG. Exports from Africa continent. Have also surged to the recent weeks.

Especially from Nigeria and Algeria pushing Total Renal output of the strongest level since late 2022.

This has happened in a parallel with a strong demand of LNG from Egypt so strong. Uh, so strong that this is causing some congestion with several carriers waiting to discharge this creates efficiencies and absorbs a lot of shipping capacity

Lastly, we have seen some signs of pricing spread between the jkm and the ttf laying the groundwork for some arbitration opportunities. In some, we see a very attractive spot market and there are pockets of shipping in fishes which canceled Lily, absorb a lot of the tonnage on the short time and this drives the spot market now.

25, which is up 3% from last year.

The US is driving that growth exporting, 87 million tons at a 22% jump year on year.

Qatar is steady at around 68 million tons, while Australia has slipped 5%.

On the import side, Europe is the clear growth Engine with Imports of 26% of setting the clients in Asia.

The more mature Japan, Korea, Taiwan, or the JKT-C block is down 1%. Whereas China is down 18%.

And India is down 6%. Showing that Asian buyers are pulling back from these levels around 10 and 11 dollars per mma2.

On this slide we illustrate the accelerating growth in US export volumes.

The US export close to 10 million tons LNG in October with Freeport Corpus, Christi and plaque and Minds as achieved record volumes.

Take plain as an example that project has impressively ramped up. The production volumes and are now pushing already name plate capacity.

From a trade flow perspective. Most UNG cargos continue to head to Europe contributing to elevated inventories levels.

Shipments to Asia, has increased modestly and more vessels. Take the longer Cape of Good. Hope Roots. Boosting the tan mild demand to Asia, share remains below the peak in 2024.

So far in 2025, there has only been 18. L&D carriers ordered this is marketed down from previous years, and the lowest number for the first 9 months since 20129.

The new building price for a standard 174,000, cubic meter vessel has seemingly flat out.

Below the $250 million mark and is currently quoted at around $240 million by ship brokers.

The shipyards are quite busy and the slots offered for these levels are for deliveries in the second half of 2028 and onwards.

The order book itself stands at around 287 vessels, which equals around 40% of the life leads.

The bulk of Fleet growth is concentrated to the this year, 2026 and 2027.

There is a considerable slippage of deliveries from 2025 to 2026.

Less than 30 of these new buildings are open and we would like to highlight that the most new vessels are already tied up to Qatar project or other long-term projects entering programs.

This profile means that the that while there will be a lot of new tonnage entering the market in the midterm. However, our own backlog gives us strong illustration of the near-term, flu Fleet growth

We are seeing a wave of LNG vessels retirement this year 14 so far in 2025 has already.

Uh, been scrapped.

The following gradual climb in scrapping in 2003, as older steam turbine ships, reach the end of their economic life.

The average age of scrap vessel continued to fall. Now around 26 years down from nearly 40, few years ago.

Meaning that ships are being retired earlier than before.

On the rights, you can see the age profile of the live Fleet about a third of the LNG carriers on the water today are 15 years old and 10% are already past 20 years.

We see some 30 steam vessels are set for the fourth 5 year special survey over the next 12 months.

As there is a very limited appetite for steam vessels in the current spot Market. We believe this will push ship owners in the direction of scrapping versus substantial investment of another dry docking.

So while 2025 is already a record year for scrapping, the trend is set to continue as operators make room for new buildings wave and retire the dinosaurs of the fleet

On the left hand side, we are looking at the sign. The long-term sba's volumes. The first 9 months of 2025 has seen record high activity.

79 million, tons of new loan contracts approaching a peak levels, last seen in 2011.

This reflects a renewed appetite for long-term offtake, particularly among Asian buyers who are looking at Future Supply to manage Prime and security risk.

Giving developers of commercial backing needed to move forward.

You can see that the momentum of the right hand side of the slide, the way of having new fids continue through into the third quarter.

Early in the year. Several Majors project reached FID including Luciana.

Corpus Christi midscale and CP.

In September and October next decade to FID on Rio Grande LNG, trains 4 and 5. While sport. Artur face 2 and coral North flnd in musam beak added, another 16 million tons combined,

Altogether, FID activity here. Today, stands around 68 million tons.

With the US accounting for new nearly 60 million tons of that. Underlying, it continued dominance over the next wave of LD Supply growth.

Let's wrap it up. The market section, with a slide showing the growth in new liquid-faction capacity.

The outlook for new LD supplier remains very strong and the way is still building.

what we are seeing is that the next phase of global LNG growth, starting to take shape,

Over next year's there will be a steady team of new volumes. Entering the markets supported by Financial investment decision, already taken and the record level of long-term contract we discussed earlier.

The 2 key drivers for upcoming Supply, wave are Qatar and the US states.

Qatar is moving ahead with the Northfield expansion. The US continues to lead the charge of the new project fids with several facilities already under construction and more expected to reach FID soon.

With this new waiver project coming, the outlook for LNG, shipping is bright and we are well positioned to capture opportunities ahead.

With that, let's move over to the Q&A session.

Thank you Marius. Um,

That's open up for the Q&A, and thank you to everyone who has sent in their questions.

Um,

there are a couple of questions regarding, uh, Flex volunteer, but uh, probably more related to the system versus Flex Aurora and options. Uh, that that you uh, early next year.

Uh, question relates to the likelihood of that option being declared or if you can share any more information around it.

Yeah, I know, uh, as we have explained in the presentation, there are volunteers coming back to us, and going to dry dock. And the, uh, Flex Aurora option is due in, uh, q1. Uh, and we are anxiously waiting for same, uh, given the momentum in the current sport market and maybe that will continue into next year. It will be even more interesting to see if, uh,

how they will deal with the option or not. We are always, uh, optimistic until we have the options or not, but for sure. The momentum in the spot market right now is, uh, maybe people, uh, in general have, uh, other thoughts, uh, which have options to do, uh, in the near course. Yeah. And, uh, with then, um,

uh, volunteer coming back. Um, we have a flex. Autumn is open. Uh, there's a number of questions on the opportunities there for, uh, for more of the turn market and longer term contracts. Uh, we did not cover that this time in the presentation, so what can you say about, uh, the, the activity, and the term Market?

Yeah, first of all, the flex automates is now been uh basically covered throughout 2025 which we have before. Uh, after we came back from gastec, there has been uh, a good number of uh, term requirements, both for prompt deliveries and uh deliveries in 2028 onwards. So uh, and we expect even more Pro um, new projects to, to enter the market. So,

With what we have explained, today's presentation with the the volume growth coming, uh, as well as you see. Uh, most likely uh highway or scrapping. I think Flex L and D with the potential positions coming forward. The next couple years. We are in a good position to uh, renew, uh, and enter into the market. So, from where I'm standing today. We are quite optimistic and bullish about the coming 3, 4 years.

And uh we also have a number of questions which are recurring from previous quarters and relates to how to spend it and our cash balance.

Um,

More Market exposure. Uh,

With the ships, coming back to us. It's important to have a, a solid balance sheet and available liquidity, so we can maintain our, uh, commercial flexibility. Yeah. I think it's worth that that, uh, we aim to trade, uh, the ships we have coming open or are open in the spot Market until, uh, the term rates, uh, come back where they should be, uh, and deserve to have our fleets on time Charter. So I think we should be, as we said, disciplined and the patient. Yeah.

Uh, we also have a couple of questions, uh, on the D listing, uh, as uh, we informed on the last quarter. Um, we had our last day of trading on Oslo Stock Exchange, on the 15th of September, and the listed from Oslo Stock Exchange on the 16th of September, uh, we are very pleased to see that the number of the shareholders, uh, on Oscar stock is, uh, continue to, to trade on the, on the share and remain shareholders. Now on New York Stock Exchange,

Um, there are small portion of, uh, of shareholders remaining, uh, with euron next. Uh, security is Oslo. Um, so we encourage those to contact their bank and request, uh, the bank to transfer the shares to New York Stock Exchange. So you can continue trade, uh, in the flex LNG, share

Very pleased to see all the shareholders coming to New York, and we look forward to joining us for the next wave coming forward. So, with that, I would like to thank you all for joining us on this Q3 presentation today and look forward to welcome you back in early February for our Q4 presentation.

So uh in the meantime stay cool and thank you very much.