SHanscheKey Takeaway In my previous equity research note on Flex LNG (NYSE:FLNG) from February 2023, I recommended the company with a Hold as a robust investment choice within the shipping sector, particularly for investors seeking a stable dividend income stream. Since that assessment, Flex LNG has distributed approximately $170 million or $3.875 per share, consistent with my initial expectations. Upon revisiting my analysis, almost a year later, I find that not much has changed over the past year, exc ...

With Presidential elections around the corner in the United States, portfolios can be fine-tuned. It’s worth noting that Donald Trump’s chances of winning the 2024 Presidential election have increased to 50%. Therefore, it makes sense to look at some sectors and stocks that will likely benefit if Trump is back to power.During the first term, the Trump administration had focused on “expediting infrastructure projects including oil and gas pipelines and LNG plants.” If Trump assumes power, I would be bullish ...

13 certain commercial seagoing vessels flying the flag of an EU member state may be recycled only in facilities included on the European list of permitted ship recycling facilities. Apart from that, any vessel, including ours, is required to set up and maintain an Inventory of Hazardous Materials from December 31, 2018 for EU flagged new ships and from December 31, 2020 for EU flagged existing ships and non-EU flagged ships calling at a port or anchorage of an EU member state. Such a system includes informa ...

SHansche Introduction FLEX LNG (NYSE:FLNG) is an enticing investing idea for shipping investors. The company operates in the LNG shipping industry. It has a young fleet equipped with new-generation propulsion plants. FLNG has leveraged its capital structure due to its intensive capital investments over the last few years. Having new ships with efficient propulsion pays off, and FLNG scores the highest margins against its peers. LNG carrier's supply side seems to be oversaturated. The order book is 51%. ...

FLEX LNG Ltd. (NYSE:FLNG) Q4 2023 Earnings Conference Call February 7, 2024 9:00 AM ET Company Participants Øystein Kalleklev - Chief Executive Officer Knut Traaholt - Chief Financial Officer Conference Call Participants Øystein Kalleklev Hi, everybody and welcome to Flex LNG's Fourth Quarter and Full Year 2023 Presentation. I'm Øystein Kalleklev, CEO of Flex LNG management and I will be joined later today by our CFO, Knut Traaholt, who will run you to the numbers. As usual, we will conclude with a Q&A sess ...

[Interim Financial Information](index=1&type=section&id=Interim%20Financial%20Information) This section presents the company's unaudited interim financial results, operational performance, market insights, and detailed financial disclosures for the periods ended December 31, 2023 [Financial and Operational Highlights](index=2&type=section&id=Financial%20and%20Operational%20Highlights) For the fourth quarter of 2023, Flex LNG reported a net income of **$19.4 million**, with basic earnings per share of **$0.36**, Adjusted EBITDA stood at **$76.2 million**, and the company declared a quarterly dividend of **$0.75 per share**, while operationally, the charterer for Flex Resolute extended its contract, and the option for Flex Constellation was not utilized Q4 2023 Key Financial Metrics | Metric | Q4 2023 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $19.4 million | $45.1 million | | Basic EPS | $0.36 | $0.84 | | Adjusted EBITDA | $76.2 million | $74.7 million | | Adjusted Net Income | $37.8 million | $36.1 million | | Adjusted Basic EPS | $0.70 | $0.67 | | Vessel Operating Revenues | $97.2 million | $94.6 million | | Average TCE Rate | $81,114/day | $79,207/day | - The Board of Directors declared a cash dividend of **$0.75 per share** for Q4 2023, payable around March 5, 2024[82](index=82&type=chunk) - In January 2024, the charterer of Flex Resolute extended the firm period by an additional **two years** to Q1 2027[88](index=88&type=chunk) - The charterer of Flex Constellation did not utilize its extension option; the vessel will be redelivered and marketed for new contracts after its scheduled dry-docking[87](index=87&type=chunk) [CEO Commentary](index=3&type=section&id=CEO%20Commentary) The CEO highlighted that the company successfully met its 2023 guidance for revenues, TCE rate, and Adjusted EBITDA, delivering revenues of **$371 million**, and despite anticipating a more challenging freight market in the next two years, the company is well-positioned with **94% charter coverage** for 2024 and a strong balance sheet, declaring a quarterly dividend of **$0.75 per share**, totaling **$3.125 per share** for 2023 - Delivered on all 2023 guidance: revenues of **$371 million** (vs. ~$370M guided), full-year TCE rate of **$79,500/day** (vs. ~$80,000 guided), and Adjusted EBITDA of **$290 million** (vs. $290-295M guided)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company is well-positioned for a potentially challenging market with **94% charter coverage** for 2024 and a minimum firm charter backlog of **50 years**[93](index=93&type=chunk) - The Board declared a quarterly dividend of **$0.75 per share**, with total dividends for 2023 amounting to **$3.125 per share**, providing an approximate **11% annual yield**[94](index=94&type=chunk) [Business Update and Fleet Overview](index=4&type=section&id=Business%20Update%20and%20Fleet%20Overview) The company's firm contract coverage is **94%** for the remainder of 2024, with an aggregate firm contract backlog of **50 years**, potentially increasing to **71 years** with options, while technical uptime was **100%** in Q4 2023, and the fleet consists of **13 modern LNG carriers**, holding **$410.5 million** in cash and **$1,812.1 million** in long-term debt as of year-end 2023 - Firm contract coverage for the remainder of 2024 is **94%**, and the aggregate firm contract backlog is **50 years**, with the potential to increase to **71 years** if all charterer options are exercised[97](index=97&type=chunk) - Recent charter updates include the non-extension of Flex Constellation's charter, making it available in Q2 2024, and a **two-year extension** for Flex Resolute, securing its contract until Q1 2027[95](index=95&type=chunk)[96](index=96&type=chunk) Financial Position as of Dec 31, 2023 | Item | Amount (millions) | | :--- | :--- | | Cash, cash equivalents and restricted cash | $410.5 | | Total long-term debt | $1,812.1 | - The company has interest rate swap agreements with an aggregate net notional principal of **$720.0 million**, swapping floating rates to a weighted average fixed rate of **1.35%**[101](index=101&type=chunk) [Financial Results Analysis](index=5&type=section&id=Financial%20Results%20Analysis) This section provides a detailed comparison of financial performance, where for Q4 2023 versus Q3 2023, revenues increased to **$97.2 million**, but a loss on derivatives led to a lower net income of **$19.4 million**, and for the full year 2023 versus 2022, revenues grew to **$371.0 million** from **$347.9 million**, driven by higher charter rates, but higher interest expenses and lower gains on derivatives resulted in a decreased net income of **$120.0 million** for 2023 compared to **$188.0 million** in 2022 [Q4 2023 vs Q3 2023 Performance](index=5&type=section&id=Q4%202023%20vs%20Q3%202023%20Performance) In Q4 2023, vessel operating revenues rose to **$97.2 million** from **$94.6 million** in Q3, driven by higher spot market rates, but a significant loss on derivatives of **$11.6 million** (compared to a **$15.6 million** gain in Q3) due to falling forward interest rates caused net income to decrease to **$19.4 million** from **$45.1 million**, while Adjusted EBITDA increased slightly to **$76.2 million** Q4 2023 vs Q3 2023 Financial Comparison | Metric (in millions) | Q4 2023 | Q3 2023 | | :--- | :--- | :--- | | Vessel Operating Revenues | $97.2 | $94.6 | | Vessel Operating Expenses | $18.4 | $16.9 | | (Loss)/Gain on Derivatives | $(11.6) | $15.6 | | Net Income | $19.4 | $45.1 | | Adjusted EBITDA | $76.2 | $74.7 | [FY 2023 vs FY 2022 Performance](index=7&type=section&id=FY%202023%20vs%20FY%202022%20Performance) For the full year 2023, vessel operating revenues increased to **$371.0 million** from **$347.9 million** in 2022, due to improved long-term contracts and a stronger spot market, and despite higher revenues, net income fell to **$120.0 million** from **$188.0 million**, primarily due to a significant increase in interest expense (**$108.7 million** vs. **$76.6 million**) and a smaller gain on derivatives (**$18.3 million** vs. **$79.7 million**), with Adjusted EBITDA for 2023 at **$289.6 million**, up from **$272.3 million** in 2022 Full Year 2023 vs 2022 Financial Comparison | Metric (in millions) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Vessel Operating Revenues | $371.0 | $347.9 | | Interest Expense | $108.7 | $76.6 | | Gain on Derivatives | $18.3 | $79.7 | | Net Income | $120.0 | $188.0 | | Adjusted EBITDA | $289.6 | $272.3 | - The Time Charter Equivalent (TCE) rate for FY 2023 increased to **$79,461 per day** from **$72,806 per day** in FY 2022[122](index=122&type=chunk) [Cash Flow and Balance Sheet](index=9&type=section&id=Cash%20Flow%20and%20Balance%20Sheet) As of December 31, 2023, the company's cash position was strong at **$410.5 million**, with net cash from operating activities in Q4 at **$54.3 million**, and total long-term debt increased to **$1,812.1 million** from **$1,714.7 million** at year-end 2022 due to refinancing activities, while total equity decreased to **$847.7 million** from **$907.1 million**, mainly because dividend payments of **$181.2 million** exceeded the net income of **$120.0 million** for the year - Net cash provided by operating activities was **$54.3 million** in Q4 2023, up from **$46.2 million** in Q3 2023[131](index=131&type=chunk) - Net cash used in financing activities was **$73.5 million** in Q4 2023, primarily due to dividend payments of **$47.0 million** and debt repayments[133](index=133&type=chunk)[167](index=167&type=chunk) - Total equity decreased from **$907.1 million** at YE 2022 to **$847.7 million** at YE 2023, as dividends paid (**$181.2M**) outpaced net income (**$120.0M**)[138](index=138&type=chunk) [LNG Market Update](index=11&type=section&id=LNG%20Market%20Update) The LNG market saw spot charter rates decline in Q4 2023 from their Q3 peak due to mild winter conditions, while global LNG trade volume grew **3%** to a record **412MT** in 2023, with the US leading exports, and China regaining its status as the world's largest LNG importer, with the market anticipating a tighter balance from 2026 onwards, and in 2024, approximately **14MTPA** of new export volume is expected, while **69 newbuild vessels** are scheduled for delivery, creating near-term supply pressure - LNG spot freight rates peaked in Q3 2023 and declined in Q4 due to mild weather, though they remained at elevated levels, averaging around **$93,000-$97,000/day** for 2023[140](index=140&type=chunk) - Global LNG trade volume reached a record high of **412MT** in 2023, a **3% increase**, with the US as the leading exporter, and China becoming the largest importer again[143](index=143&type=chunk)[144](index=144&type=chunk) - The LNG carrier fleet is growing, with **69 newbuilds** scheduled for delivery in 2024, compared to ~**14MTPA** of new export volumes expected to be added, suggesting potential near-term market softness[145](index=145&type=chunk)[147](index=147&type=chunk) - The Biden administration's halt on new LNG project approvals could risk delays for future Final Investment Decisions (FIDs), particularly for US-based projects[146](index=146&type=chunk) [Financial Statements](index=17&type=section&id=Financial%20Statements) This section contains the unaudited condensed consolidated financial statements for the periods ended December 31, 2023, including the Statements of Comprehensive Income, Balance Sheets, Statements of Cash Flows, and Statement of Changes in Equity [Condensed Consolidated Statements of Comprehensive Income](index=17&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Presents the company's revenues, expenses, and net income for the three months and year ended December 31, 2023, compared to the same periods in 2022 [Condensed Consolidated Balance Sheets](index=18&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's assets, liabilities, and equity as of December 31, 2023, compared to September 30, 2023, and December 31, 2022 [Condensed Consolidated Interim Statements of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) Outlines the cash flows from operating, investing, and financing activities for the three months and year ended December 31, 2023, and 2022 [Condensed Consolidated Interim Statement of Changes in Equity](index=21&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) Shows the changes in the company's equity components, including share capital, treasury shares, and accumulated deficit, for the years ended December 31, 2023, and 2022 [Notes to the Interim Consolidated Accounts](index=23&type=section&id=Notes%20to%20the%20Interim%20Consolidated%20Accounts) This section provides detailed explanations and supplementary information for the line items presented in the consolidated financial statements, covering accounting policies, earnings per share, debt, financial instruments, related party transactions, and other key financial details [Note 3: Earnings per share](index=23&type=section&id=Note%203%3A%20Earnings%20per%20share) This note details the calculation of basic and diluted earnings per share (EPS), where for the year ended December 31, 2023, basic EPS was **$2.24** and diluted EPS was **$2.22**, and dividends paid per share for the full year totaled **$3.38** Earnings and Dividends Per Share | Per Share Data | Q4 2023 | Q3 2023 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.36 | $0.84 | $2.24 | $3.53 | | Diluted EPS | $0.36 | $0.84 | $2.22 | $3.51 | | Dividends Paid | $(0.88) | $(0.75) | $(3.38) | $(3.50) | [Note 7: Vessels and equipment, net](index=25&type=section&id=Note%207%3A%20Vessels%20and%20equipment%2C%20net) The net book value of vessels and equipment decreased from **$2,269.9 million** at the start of 2023 to **$2,217.3 million** at year-end, reflecting a depreciation charge of **$73.4 million**, partially offset by **$20.7 million** in additions for drydocks, with four vessels completing their first scheduled drydocks during 2023 Movement in Vessels and Equipment, Net (in thousands) | Description | Amount | | :--- | :--- | | Net Book Value at Jan 1, 2023 | $2,269,946 | | Additions (Drydocks) | $20,714 | | Depreciation Charge | $(73,359) | | Disposals | $0 | | **Net Book Value at Dec 31, 2023** | **$2,217,301** | - Flex Enterprise, Flex Endeavour, Flex Ranger, and Flex Rainbow all completed their first scheduled drydocks in 2023[11](index=11&type=chunk)[12](index=12&type=chunk) [Note 9: Long-term debt](index=27&type=section&id=Note%209%3A%20Long-term%20debt) As of December 31, 2023, the company's total long-term debt obligations amounted to **$1,812.1 million**, an increase from **$1,714.7 million** at the end of 2022, with the debt spread across various term loans and sale and leaseback facilities Long-Term Debt Summary (in millions) | Date | Total Long-Term Debt | | :--- | :--- | | Dec 31, 2023 | $1,812.1 | | Dec 31, 2022 | $1,714.7 | [Note 10: Financial Instruments](index=27&type=section&id=Note%2010%3A%20Financial%20Instruments) To manage interest rate risk, the company utilizes interest rate swap agreements, and as of December 31, 2023, these agreements covered an aggregate notional principal of **$720.0 million**, with the company recording a total gain on derivatives of **$18.3 million** for the full year 2023, comprising a **$25.0 million** realized gain and a **$6.7 million** unrealized loss - The company has interest rate swap agreements on an aggregate notional principal of **$720.0 million** as of December 31, 2023, to swap floating interest rates to fixed rates[15](index=15&type=chunk) Gain/(Loss) on Derivatives (in thousands) | Period | Change in Fair Value | Realized Gain/(Loss) | Total Gain/(Loss) | | :--- | :--- | :--- | :--- | | **Q4 2023** | $(18,673) | $7,051 | $(11,622) | | **FY 2023** | $(6,686) | $24,967 | $18,281 | [Note 16: Subsequent Events](index=33&type=section&id=Note%2016%3A%20Subsequent%20Events) Following the end of the fourth quarter, the charterer of Flex Constellation did not exercise its extension option, with the vessel expected to be redelivered in Q1/Q2 2024, and conversely, the charterer of Flex Resolute exercised a **two-year extension option**, extending the firm charter period to Q1 2027, while the Board declared a Q4 2023 dividend of **$0.75 per share** in February 2024 - In January 2024, the charterer of Flex Constellation did not utilize its extension option, and the vessel is expected to be redelivered in Q1 or early Q2 2024[43](index=43&type=chunk) - In January 2024, the charterer of Flex Resolute exercised its first extension option, extending the firm charter period by **two years** to Q1 2027[44](index=44&type=chunk) - On February 6, 2024, the Board of Directors declared a cash dividend of **$0.75 per share** for Q4 2023[45](index=45&type=chunk) [Non-GAAP Financial Measures Reconciliations](index=34&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliations) This section provides reconciliations of non-GAAP financial measures to their most directly comparable U.S. GAAP counterparts, including detailed tables for EBITDA and Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, Time Charter Equivalent (TCE) Income and Rate, and Operating Expenses (Opex) per day, which are used by management and analysts to assess performance [Reconciliation to EBITDA and Adjusted EBITDA](index=34&type=section&id=Reconciliation%20to%20EBITDA%20and%20Adjusted%20EBITDA) This reconciliation bridges Net Income to EBITDA and Adjusted EBITDA, where for the full year 2023, Net Income of **$120.0 million** reconciled to an EBITDA of **$306.1 million** and an Adjusted EBITDA of **$289.6 million** EBITDA and Adjusted EBITDA Reconciliation (FY 2023, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $120,039 | | Interest expense, net & other | $112,739 | | Depreciation | $73,363 | | **EBITDA** | **$306,141** | | Adjustments (Derivatives, etc.) | $(16,498) | | **Adjusted EBITDA** | **$289,643** | [Reconciliation to Adjusted Net Income and Adjusted EPS](index=35&type=section&id=Reconciliation%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) This table adjusts Net Income for non-recurring or non-operational items like extinguishment costs of debt and changes in derivative values, where for the full year 2023, Net Income of **$120.0 million** was adjusted to an Adjusted Net Income of **$137.3 million**, resulting in an Adjusted Basic EPS of **$2.56** Adjusted Net Income Reconciliation (FY 2023, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $120,039 | | Extinguishment costs of long-term debt | $10,238 | | Change in assets/liabilities of derivative instruments | $6,686 | | Foreign exchange (gain)/loss | $350 | | **Adjusted net income** | **$137,313** | [Reconciliation to Time Charter Equivalent (TCE)](index=36&type=section&id=Reconciliation%20to%20Time%20Charter%20Equivalent%20(TCE)) This section defines and calculates Time Charter Equivalent (TCE) income and rate, a standard shipping industry metric, where for the full year 2023, vessel operating revenues of **$371.0 million** translated to a TCE income of **$369.3 million**, yielding an average TCE rate of **$79,461 per day** TCE Rate Calculation (FY 2023) | Metric | Value | | :--- | :--- | | Vessel operating revenues | $371,022 thousand | | Voyage expenses | $(1,678) thousand | | **Time charter equivalent income** | **$369,344 thousand** | | Fleet onhire days | 4,648 | | **Time charter equivalent rate** | **$79,461 / day** |

1 FLEX LNG Third Quarter 2023 Result Presentation FORWARD-LOOKING STATEMENTS THE FORWARD-LOOKING STATEMENTS IN THIS PRESENTATION 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 FLEX LNG BELIEVES THAT THESE ASSUMPTIONS WERE REASONABLE WHEN MADE, BECAUSE THESE ASSUMPTIONS ARE INHERENT ...

Interest expense was $27.5 million in the third quarter 2023, compared to $27.2 million in the second quarter 2023. Net income for the third quarter 2023 was $45.1 million and basic earnings per share were $0.84, compared to a net income of $39.0 million and basic earnings per share of $0.73 for the second quarter 2023. Adjusted EBITDA was $74.7 million for the third quarter 2023, compared to $66.2 million for the second quarter 2023. 2 2 Adjusted net income for the third quarter 2023 was $36.1 million and ...

Second Quarter 2023 Result Presentation August 16, 2023 1 Flex Endeavour in dry-dock April 2023 FORWARD-LOOKING STATEMENTS MATTERS DISCUSSED IN THIS PRESENTATION 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 ...

Financial Data and Key Metrics Changes - Revenues for Q2 2023 were $86.7 million, slightly lower than Q1 due to drydockings and a softer spot market, but higher than $348 million recorded last year [5][9][27] - Adjusted net income for Q2 was $28.2 million, resulting in adjusted earnings per share of $0.53, while net income was $39 million or $0.73 per share [27][63] - The company reaffirmed its revenue guidance for the year at $370 million and adjusted EBITDA between $290 million to $295 million [21][40][100] Business Line Data and Key Metrics Changes - The company completed drydockings for four ships this year, impacting revenues in Q2 but expected to boost revenues in the second half of the year [5][40][99] - Time charter equivalent earnings are expected to be around $80,000, higher than last year, driven by a repriced portfolio of ships [6][21] Market Data and Key Metrics Changes - European LNG imports grew by 5 million tonnes in the first seven months of 2023, while Chinese demand rebounded with a 20% growth in Q2 [15][30] - Gas prices in Europe fell from $100 per million BTU to about $10, creating a competitive environment for LNG against oil [16][31] - The company noted potential supply crunches due to possible strikes in Australia, which could affect global LNG volumes [17][50] Company Strategy and Development Direction - The company is focused on maintaining a strong backlog, currently at 54 years of minimum contract backlog, with expectations for options to be declared due to rising term rates [22][68] - The strategy includes optimizing the balance sheet and maintaining a high hedge ratio for interest rates to mitigate risks [11][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about revenue growth in Q3 and Q4, expecting revenues between $92 million to $100 million as all ships return to operation [21][99] - The management highlighted the importance of LNG in replacing Russian pipeline gas in Europe and the need for affordable prices to attract new consumers [86] Other Important Information - The company declared a dividend of $0.75 per share for Q2, bringing the total dividends over the last 12 months to $3.25, yielding about 10% [8][101] - The company has a solid cash position of $450 million with no debt maturities prior to 2028 [12][100] Q&A Session Summary Question: Was it a surprise that Cheniere declared the option on the Vigilant early? - Management stated it was not a surprise as it was planned, and they expect other options to be declared soon [66] Question: Are there inflation adjustments in fixed-rate contracts? - Management confirmed there are no inflation adjustments, but they have hedged against inflation risks through interest rate management [67] Question: What is the likelihood of options being declared? - Management indicated a high likelihood of options being extended due to rising newbuilding prices and favorable market conditions [68] Question: Will the company consider continuous maintenance during operations? - Management explained that while continuous maintenance is conducted, the concept differs from drilling rigs, and they prepare in advance to minimize dock time [69] Question: How is the Panama Canal situation affecting the company? - Management noted that low water levels and increased waiting times in the Panama Canal are creating inefficiencies, impacting shipping schedules [76][85] Question: What is the outlook for LNG commodity prices? - Management expects prices to remain tight in the short term due to high demand for the winter market and limited new LNG supply [78]