FLEX LNG Ltd. (FLNG) Q1 2025 Earnings Call Transcript

FLEX LNG (FLNG) reported Q1 2025 revenues of $86.8 million, translating to a time charter equivalent (TCE) of $73,900 per day, and an adjusted net income of $29.4 million or $0.54 per share. The company reaffirmed its full-year 2025 revenue guidance of $340 million to $360 million and TCE between $72,000 and $77,000 per day, while declaring a $0.75 per share dividend, representing a 12% trailing twelve-month yield. FLNG is also initiating a balance sheet optimization program targeting $120 million in free cash and has secured a JOLCO financing for Flex Courageous, while pursuing similar arrangements for Flex Resolute and Flex Constellation; the company has submitted an application to delist from the Oslo Stock Exchange.

Analysis

FLEX LNG Ltd. (FLNG) reported Q1 2025 revenues of $86.8 million (excluding EUAs), achieving a time charter equivalent (TCE) of $73,900 per day, and an adjusted net income of $29.4 million, or $0.54 per share. The company reaffirmed its full-year 2025 guidance, expecting revenues between $340 million and $360 million and a TCE between $72,000 and $77,000 per day, despite four vessels undergoing special surveys. A quarterly dividend of $0.75 per share was declared, maintaining a trailing twelve-month dividend of $3.00 per share and a 12% yield, supported by a $410 million cash balance and a 59-year minimum firm contract backlog. Near-term market dynamics present a mixed picture: Flex Constellation is trading in a seasonally weak spot market since late February 2025 and Flex Artemis is expected to be redelivered in Q3 2025, also facing a softer spot environment, though management is seeking term employment for her. However, long-term fundamentals appear robust, with significant new LNG export volumes anticipated from 2028-2030, driven by projects like Woodside's Louisiana LNG and Energy Transfer's Lake Charles LNG. The company is actively managing its balance sheet through 'Optimization Program 3.0,' aiming to free up an additional $120 million in cash, including a secured JOLCO financing for Flex Courageous expected to release $40 million. The LNG shipping market sees newbuilding prices stable at $250-255 million for 2028 deliveries, while approximately 60 older, less efficient vessels are currently idling, potentially leading to increased scrapping which could help balance the market. FLNG has also initiated the process to delist from the Oslo Stock Exchange, with trading expected to cease in H2 2025, consolidating its listing on the NYSE.

Key Decisions for Investors

• Investors should consider the attractive 12% dividend yield and reaffirmed 2025 guidance, balanced against the near-term earnings variability from two vessels exposed to a soft spot market.
• Monitor the progress of the balance sheet optimization program and refinancing efforts for Flex Resolute and Flex Constellation, which aim to enhance liquidity and extend debt maturities.
• Evaluate the long-term positive outlook for LNG shipping, supported by new liquefaction projects and potential market tightening from older vessel retirements, against the current high newbuilding order book.
• Shareholders on the Oslo Stock Exchange should consult their brokers regarding the process for transferring shares to the NYSE ahead of the planned delisting in H2 2025.