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Flex LNG - Third Quarter 2022 Earnings Release

FLEX LNG
FLEX LNG

November 15, 2022
Hamilton, Bermuda


Flex LNG Ltd. ("Flex LNG" or the “Company”) today announced its unaudited financial results for the nine months ended September 30, 2022.

Highlights:
• Vessel operating revenues of $91.3 million for the third quarter 2022, compared to $84.2 million for the second quarter 2022.
• Net income of $46.6 million and basic earnings per share of $0.88 for the third quarter 2022, compared to net income of $44.3 million and basic earnings per share of $0.83 for the second quarter 2022.
• Average Time Charter Equivalent ("TCE") rate of $75,941 per day for the third quarter 2022, compared to $70,707 per day for the second quarter 2022.
• Adjusted EBITDA1 of $70.9 million for the third quarter 2022, compared to $66.1 million for the second quarter 2022.
• Adjusted net income1 of $42.2 million for the third quarter 2022, compared to $31.6 million for the second quarter 2022.
• Adjusted basic and diluted earnings per share1 of $0.79 for the third quarter 2022, compared to $0.60 for the second quarter 2022.
• In September 2022, the Company signed a $150 million term loan facility for the financing of Flex Enterprise.
• In November 2022, the Company received a credit approved term sheet for a $150 million term loan facility for the re-financing of Flex Resolute.
• In November 2022, the Company received a credit approved term sheets for a $330 million sale and leaseback agreement for the re-financing of Flex Amber and Flex Artemis.
• As per date of this report, the Company has SOFR and LIBOR based interest rate swaps with aggregate notional principals of $381 million and $260 million respectively. The weighted average SOFR interest rate is 1.32% with weighted average duration of 5.3 years. Whilst the weighted average LIBOR interest rate is 1.11% with a weighted average duration of 2.6 years.
• The Company declared a dividend for the third quarter 2022 of $0.75 per share.


Øystein M Kalleklev, CEO of Flex LNG Management AS, commented:
“During the third quarter, Flex Enterprise and Flex Amber commenced their new seven-year Time Charters agreed in June 2022. Additionally, Flex Aurora was delivered to Cheniere as the fifth and last ship under the agreement announced in April 2021. Hence, Flex LNG today have 12 LNG carriers on fixed hire Time Charters and one ship, Flex Artemis, on a variable time charter. Our first fully open ship, after charterer's options, is in the middle of 2026 with three other ships coming open in 2027. Today, with 2027 the earliest newbuilding delivery window and newbuilding prices at around $250 million, we are therefore upbeat about the prospects of re-contracting our ships at attractive levels thereby adding further backlog to the Company.

For the third quarter, Revenues came in at $91 million in line with previous guidance of approximately $90 million. Net income came in at a healthy $47 million equivalent to $0.88 per share. For the first nine months of 2022, total Net income is $147 million, fuelled by $75 million gains on interest rate derivatives, as we have been ahead of the curve locking in long term interest rates at very attractive levels before Federal Reserve started to hike rates. Adjusted Net income, whereby unrealized gains on derivatives and non-recurring items are eliminated came in at $42 million equivalent to $0.79 per share for the quarter.

Following the completion of Balance Sheet Optimization Phase 1 in July where we raised $137 million of fresh cash by refinancing six of our ships, we announced Phase 2 of our Balance Sheet Optimization Program. Under Phase 2 we will optimize financing for the remaining seven ships in the fleet with the aim of increasing our cash position by a further $100m while at the same time improving our overall financing terms. We have now secured refinancing for four of the seven ships with net proceeds of $110 million. We are thus already ahead of the $100 million target, and we expect the cash release to grow further as we are also making good progress on the refinancing of the remaining three ships. In total, we now expect that the Balance Sheet Optimization Program will at least release $300 million in cash. Our cash position is already at a healthy $271 million at quarter end thus we expect this number to move upward as we are completing these refinancings.

Given the strong freight market, our extensive contract backlog and our super strong financial position we are therefore today pleased to declare an ordinary quarterly dividend of $0.75 per share which should provide our shareholders with an attractive yield of approximately 10 per cent.”


Third Quarter 2022 Result Presentation
Flex LNG will release its financial results for the third quarter 2022 on Tuesday November 15, 2022.

In connection with the earnings release, a video webcast will be held at 3:00 p.m. CET (9:00 a.m. EST). In order to attend the webcast use the following link: events.webcast.no/viewer-registration/AFsFIAbO/register

A Q&A session will be held after the conference/webcast. Information on how to submit questions will be given at the beginning of the session.

In conjunction with the quarterly results, we have published a short video in which Øystein Kalleklev, CEO of Flex LNG, discusses the highlights of the third quarter. The video can be accessed through the following link:
youtu.be/tsU0jebpux0

The presentation material which will be used in the conference/webcast can be downloaded on www.flexlng.com and replay details will also be available at this website.


For further information, please contact:
Mr. Knut Traaholt, Chief Financial Officer of Flex LNG Management AS
Telephone: +47 23 11 40 00
Email: ir@flexlng.com

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.

Forward-Looking Statements
Matters discussed in this press release 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 events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "expect," "forecast," "anticipate," "estimate," "intend," "plan," "possible," "potential," "pending," "target," "project," "likely," "may," "will," "would," "should," "could" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release 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 management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. As such, these forward-looking statements are not guarantees of the Company’s future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements. The Company undertakes no obligation, and specifically declines any obligation, except as required by applicable law or regulation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include: unforeseen liabilities, future capital expenditures, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the LNG tanker market, the impact of public health threats and outbreaks of other highly communicable diseases, including the length and severity of the COVID-19 outbreak and its impact on the LNG tanker market, changes in the Company’s operating expenses, including bunker prices, dry-docking and insurance costs, the fuel efficiency of the Company’s vessels, the market for the Company’s vessels, availability of financing and refinancing, ability to comply with covenants in such financing arrangements, failure of counterparties to fully perform their contracts with the Company, changes in governmental rules and regulations or actions taken by regulatory authorities, including those that may limit the commercial useful lives of LNG tankers, customers' increasing emphasis on environmental and safety concerns, potential liability from pending or future litigation, general domestic and international political conditions or events, including the recent conflict between Russia and Ukraine, business disruptions, including supply chain disruption and congestion, due to natural or other disasters or otherwise, potential physical disruption of shipping routes due to accidents, climate-related incidents, or political events, vessel breakdowns and instances of off-hire, and other factors, including those that may be described from time to time in the reports and other documents that the Company files with or furnishes to the U.S. Securities and Exchange Commission (“Other Reports”). For a more complete discussion of certain of these and other risks and uncertainties associated with the Company, please refer to the Other Reports.


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(1) Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the end of this earnings report.

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