Flex LNG Reports Strong Q1 Earnings Amid Market Challenges

Flex Lng ((FLNG)) has held its Q1 earnings call. Read on for the main highlights of the call.

Flex LNG Navigates Market Challenges with Strong Financial Performance

Flex LNG reported solid financial results and maintained a strong balance sheet during its recent earnings call, despite facing challenges in the spot market and the global LNG import environment. The company’s long-term outlook remains positive, supported by a robust contract backlog and a healthy cash position.

Strong Adjusted Net Income

Flex LNG reported an impressive $29.4 million in adjusted net income for the first quarter of 2025, translating to $0.54 in adjusted earnings per share. This performance highlights the company’s ability to generate substantial profits even amid market volatility.

Solid Contract Backlog

The company has secured up to 88 years of contract backlog, which provides a solid foundation for future revenue streams. This extensive backlog ensures that Flex LNG remains well-positioned to capitalize on long-term market opportunities.

Fortress Balance Sheet

Flex LNG maintains a strong balance sheet with $410 million in cash and minimal capital expenditure liabilities. This financial stability allows the company to navigate market fluctuations with confidence.

Successful Balance Sheet Optimization

The initiation of the balance sheet optimization program 3.0 aims to release an additional $120 million in free cash. This strategic move is expected to enhance the company’s financial flexibility and support future growth initiatives.

High Dividend Yield

The Board declared a $0.75 per share quarterly dividend, resulting in a trailing 12-month dividend of $3 per share or a yield of 12%. This attractive dividend yield underscores Flex LNG’s commitment to returning value to its shareholders.

Positive Long-Term LNG Market Outlook

Flex LNG is well-positioned to benefit from increasing LNG export volumes expected between 2028 and 2030. The company’s strategic positioning in the market is set to capitalize on these upcoming opportunities.

ESG Achievements

The release of the seventh ESG report, with a B score for CDP rating and zero lost time injury frequency in 2024, highlights Flex LNG’s commitment to sustainability and responsible operations.

Seasonal Lower Spot Market

The company experienced a reduction in revenues due to a seasonal lower spot market impacting the variable hire contract for Flex Artemis. This seasonal dip is a common occurrence in the LNG shipping industry.

Interest Rate Volatility

Flex LNG reported a net loss of $7.3 million on its derivative portfolio due to significant interest rate market volatility. This reflects the broader economic challenges impacting financial markets globally.

Challenging LNG Import Environment

LNG imports to China dropped by 24%, and India showed flattish growth compared to last year’s double-digit growth. These challenges in key markets have impacted the global LNG import environment.

Forward-Looking Guidance

Flex LNG has maintained its full-year revenue guidance of $340 million to $360 million, with an expected TCE of $72,000 to $77,000 per day. EBITDA is projected to be between $250 million and $270 million. The company is optimizing its balance sheet to free up $120 million in cash, with plans for refinancing initiatives. Despite a soft spot market, Flex LNG’s long-term outlook remains positive, driven by strong demand for LNG shipping from new U.S. and Qatar projects.

In conclusion, Flex LNG’s recent earnings call reflects a resilient performance amidst market challenges. The company’s strong financial results, robust contract backlog, and strategic initiatives position it well for future growth. With a positive long-term outlook and commitment to shareholder value, Flex LNG remains a key player in the LNG shipping industry.