FLEX LNG .(US:FLNG)2023-05-16 18:44Financial Data and Key Metrics Changes - Revenues for Q1 2023 were $92.5 million, aligning with guidance of $90 million to $93 million, with adjusted net income of $35.2 million or $0.66 per share [6][16][61] - The company reaffirmed its revenue guidance for the full year 2023 at $370 million, expecting adjusted EBITDA of around $290 million to $295 million [30][49] - The company maintained a strong cash position of $475 million, an all-time high, translating to about $9 per share in cash [29][38] Business Line Data and Key Metrics Changes - Average time charter equivalent earnings for the fleet were slightly above $80,000 per day, consistent with annual guidance [6][14] - Operational expenses (OpEx) per day were maintained at $13,400, reflecting effective cost control [14] - The company completed dry dockings for Flex Endeavour and Flex Enterprise on schedule and budget, with further dry dockings planned [7][48] Market Data and Key Metrics Changes - LNG exports grew by approximately 5% in the first four months of 2023, with North America being a significant contributor [20] - European gas prices have experienced volatility, with a peak of about $100 per million Btu, but have since declined due to reduced demand [21][22] - The company noted a shift in LNG demand dynamics, with increased imports to Europe and a gradual recovery in Chinese demand [40][43] Company Strategy and Development Direction - The company has a minimum contractual backlog of 57 years, providing strong revenue visibility [11][13] - The strategy focuses on long-term charters to mitigate market volatility, distinguishing it from other shipping companies [54][85] - The company is cautious about newbuilding investments due to high prices and prefers to secure long-term contracts for existing ships [108] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market outlook, citing strong earnings and a robust liquidity position [13][20] - The company anticipates a seasonal uptick in charter rates during Q3 and Q4, with revenues expected to increase to around $90 million to $100 million for those quarters [9][49] - Management highlighted the importance of balancing natural gas prices in the U.S. and their impact on drilling activity and LNG exports [52][66] Other Important Information - The company has successfully completed a balance sheet optimization program, refinancing all 13 ships in its fleet [29][103] - The company has increased its hedging portfolio to $820 million, enhancing financial flexibility [18][19] - The dividend payout of $0.75 per share reflects a yield of approximately 11% over the past 12 months [2][32] Q&A Session Summary Question: How does the low natural gas prices in the US impact Flex LNG? - Management indicated that while low prices could affect new drilling activity in the long term, current U.S. gas production remains strong [52] Question: What differentiates Flex from other shipping companies? - Management noted that Flex has long-term charters that provide stable revenues, unlike many commodity shipping companies that face volatility [54] Question: What is the outlook for LNG transport out of the US for 2023 and 2024? - Management expects muted export growth in 2024 but anticipates significant growth from 2025 onwards as new projects come online [72] Question: Is Europe an important market for Flex? - Management confirmed that Europe remains a key market, with increased imports to replace lost volumes from Russian gas [73] Question: What are the plans for growth and use of cash? - The primary focus is on dividends, with a disciplined approach to newbuilding investments, preferring to secure long-term contracts for existing ships [108]