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01/10 19:48
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows a solid financial performance with consistent TCE and a robust balance sheet, supported by a high dividend yield and a share buyback program. Despite some market challenges, such as competition and reduced LNG imports in China and India, the company maintains a positive long-term outlook. The Q&A section indicated cautious but strategic cash management and potential growth opportunities. Given the company's small market cap, the positive factors, including strong shareholder returns and optimistic guidance, are likely to result in a positive stock price movement.
Revenue $86 million for the quarter ($84 million net of EUAs), representing a slight drop compared to the first quarter due to seasonal softer spot market, impact from vessels in drydock, and variable hire contracts.
Time Charter Equivalent (TCE) $72,000 per day for the quarter, consistent with guidance but slightly lower than the first quarter due to seasonal market softness and drydockings.
Net Income $17.7 million for the quarter, implying an EPS of $0.33 per share. Adjusted net income was $24.8 million or $0.46 per share, accounting for unrealized losses on derivatives and refinancing costs.
Operating Expenses (OpEx) $18.2 million for the quarter, or $15,400 per day, slightly lower than the first quarter and in line with full-year guidance.
Cash Balance $413 million at the end of the quarter, up from $410 million at the start, supported by $44 million generated from operations, $43 million in refinancing proceeds, and offset by $41 million in dividends and $11 million in drydocking expenditures.
Drydocking Costs $5.7 million per vessel on average, slightly above previous estimates due to higher costs in Europe compared to Singapore.
Dividend $0.75 per share for the quarter, resulting in a last 12 months dividend of $3 per share, supported by a strong balance sheet and contract backlog.
LNG Trade Growth 2% growth year-over-year to 245 million tonnes from January to July 2025, driven by increased exports from the U.S. and new volumes from projects like Venture Global's Plaquemines.
European LNG Imports 74 million tonnes from January to July 2025, up 24% year-over-year, driven by replacement of Russian gas and increased U.S. exports.
Asian LNG Imports 79 million tonnes for Japan, South Korea, and Taiwan combined, down 1% year-over-year. Chinese imports fell 19% and Indian imports fell 11%, attributed to economic slowdown, trade tensions, and a shift to coal and LPG.
LNG Trade Growth: The LNG trade grew approximately 2% to 245 million tonnes from January to July 2025 compared to the same period last year. U.S. LNG exports increased by more than 20% year-over-year, while European LNG imports rose by 24%.
New Exporter: Canada joined the ranks of LNG exporters, shipping its first commercial cargo in July 2025.
Regional Import Trends: Japan, South Korea, and Taiwan remain the largest LNG importers, with 79 million tonnes imported, though this is down 1% year-over-year. Chinese and Indian imports declined by 19% and 11%, respectively, due to economic factors and a shift to coal and LPG.
Drydocking Updates: Two of four drydockings for 2025 were completed below the guided maximum of 20 off-hire days. Costs averaged $5.7 million per vessel, slightly above estimates due to higher costs in Europe.
Balance Sheet Optimization: The company completed refinancing for Flex Courageous, Flex Constellation, and Flex Resolute, freeing up $132 million in liquidity and extending debt maturity profiles.
Share Buyback Program: A $15 million share buyback program was launched, independent of dividend considerations.
Delisting from Oslo Stock Exchange: Flex LNG is delisting from the Oslo Stock Exchange, with the last trading day set for September 15, 2025.
Long-Term LNG Market Outlook: The company remains bullish on the long-term LNG market, supported by a strong contract backlog and increasing LNG volumes.
Seasonal softer spot market: The seasonal softer spot market has impacted earnings for vessels like Flex Constellation and Flex Artemis, leading to a slight drop in revenues compared to the first quarter.
Drydocking costs and operational days: Drydocking of vessels has reduced the number of operational days, impacting revenues. Additionally, the average docking cost of $5.7 million per vessel is slightly above previous estimates due to higher costs in Europe.
Unrealized losses on derivatives: The company booked unrealized losses of $5.7 million on interest rate derivatives, which negatively impacted net income.
Soft short-term LNG market: The company maintains a cautious short-term outlook on the LNG market, which could affect earnings and operational performance.
European gas storage and winter exposure: European gas storage levels have been volatile, and the region remains exposed to risks of a cold winter, which could impact LNG demand and supply dynamics.
Fleet growth and market competition: Approximately 300 LNG vessels are scheduled for delivery in the coming years, leading to potential oversupply and increased competition in the midterm.
Idling and scrapping of vessels: A significant number of vessels (9% of the active fleet) are idling, and steam vessels are increasingly being scrapped due to limited commercial opportunities, indicating market challenges.
Chinese and Indian LNG import reductions: Chinese LNG imports are down 19%, and Indian imports are down 11% year-to-year, driven by economic slowdown, trade tensions, and a shift to coal and LPG, which could impact demand.
Full Year 2025 Revenue Guidance: Revenues are projected to be in the range of $350 million to $370 million, with a TCE per day of $72,000 to $77,000.
Adjusted EBITDA Guidance: Expected adjusted EBITDA for the full year 2025 is projected to be approximately $250 million to $270 million.
Drydocking Plans: Two more drydockings are scheduled for 2025, with an average cost of $5.7 million per vessel. Flex Amber is currently in drydock, and Flex Artemis will enter drydock in late August.
Contract Backlog: The company has a strong contract backlog with 56 years of minimum backlog, potentially growing to 85 years if all charter options are declared. This provides insulation from short-term market softness.
Long-Term LNG Market Outlook: The company remains bullish on the long-term LNG market, supported by increasing LNG volumes and a strong charter backlog.
Dividend Policy: The company aims to maintain a shareholder-friendly dividend policy, supported by a strong balance sheet and contract backlog. A quarterly dividend of $0.75 per share has been declared.
New Financing Initiatives: Two new financings for Flex Resolute and Flex Constellation have been announced, freeing up $132 million in liquidity and extending debt maturity profiles.
Market Trends and Fleet Growth: Approximately 300 LNG vessels are scheduled for delivery in the coming years, with most tied to long-term projects. The company expects newbuild prices to remain stable at around $250 million per vessel.
Dividend Declaration: The Board has declared a 75% share dividend, resulting in last 12 months dividend of $3 per share. This implies dividend yield of 12% on a share price of $25. The dividend is supported by a strong balance sheet with $413 million in cash and a solid contract backlog.
Quarterly Dividend: The Board has declared an ordinary quarterly dividend of $0.75 per share. The dividend will be paid out to shareholders on record 5th of September. Payment dates are 18th of September for NYSE shareholders and 23rd of September for Oslo Stock Exchange shareholders.
Share Buyback Program: A $15 million share buyback program has been announced. The program will last until the Q3 reporting in November and will enable share buybacks in both New York and Oslo. The program is independent of the next dividend considerations for Q3.
The earnings call presents a mixed picture: strong contract backlog and dividend policy are positives, but spot market softness, drydocking costs, and charter non-renewals pose challenges. The Q&A reveals optimism about market growth but lacks clarity on certain options, leading to uncertainty. The company's commitment to dividends and strong cash position are offset by risks in market exposure and interest rate impacts. Given the market cap of $1.5 billion, these factors suggest a neutral stock price movement in the short term.
The earnings call summary shows a solid financial performance with consistent TCE and a robust balance sheet, supported by a high dividend yield and a share buyback program. Despite some market challenges, such as competition and reduced LNG imports in China and India, the company maintains a positive long-term outlook. The Q&A section indicated cautious but strategic cash management and potential growth opportunities. Given the company's small market cap, the positive factors, including strong shareholder returns and optimistic guidance, are likely to result in a positive stock price movement.
The earnings call presents a mixed picture: strong financial performance with EPS exceeding expectations and a solid backlog providing stability. However, the cautious market outlook and potential operational challenges temper enthusiasm. The high dividend yield is a positive, but concerns about market conditions and management's unclear responses in the Q&A add uncertainty. The company's market cap suggests moderate volatility, leading to a neutral prediction for short-term stock movement.
The earnings call summary presents mixed signals: strong dividend yield and a solid cash position are positive, but declining headline revenues and net income due to derivative losses are concerning. The cautious market outlook and unclear management responses in the Q&A add to uncertainties. Despite a robust contract backlog and refinancing efforts, the near-term LNG market caution and spot market volatility suggest limited positive momentum. Given the small-cap nature of the company, the stock is likely to remain stable with potential slight fluctuations, leading to a neutral sentiment.
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