FLEX LNG .(US:FLNG)2023-08-17 03:18Financial 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]