Flex Lng ((FLNG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Flex LNG’s recent earnings call painted a picture of robust financial health, underscored by strong net income figures and a commitment to shareholder returns. The company is navigating the LNG market with a positive outlook, although it faces challenges such as a softer spot market and increased operational costs. Overall, the sentiment was optimistic, with a focus on strategic growth and financial stability.
Strong Financial Performance
Flex LNG reported a net income of $17.7 million for the quarter, with an adjusted net income of $24.8 million. The company’s Time Charter Equivalent (TCE) stood at $72,000 per day, reflecting solid operational performance. The Balance Sheet Optimization Program 3.0 is progressing well, contributing to the company’s financial resilience.
Shareholder Returns and Buyback Program
The company announced a $15 million share buyback program, alongside a 75% share dividend declared by the Board. This resulted in a dividend yield of 12% over the last 12 months, demonstrating Flex LNG’s commitment to delivering value to its shareholders.
Successful Refinancing
Flex LNG successfully completed a $175 million refinancing of the Flex Courageous, which generated net proceeds of approximately $43 million. Additional financings for Flex Resolute and Flex Constellation are expected to add $90 million to the cash balance, enhancing the company’s liquidity position.
Positive LNG Market Developments
The LNG market showed promising growth, with trade increasing by approximately 2% to 245 million tonnes from January to July 2025. Notably, U.S. LNG exports surged by more than 20% year-over-year, indicating a robust demand for LNG.
Solid Contract Backlog
Flex LNG boasts a strong contract backlog, with a minimum of 56 years and potential growth up to 85 years if all charter options are exercised. This backlog provides a stable revenue stream and underpins the company’s long-term financial strategy.
Soft Spot Market Impact
The company experienced a slight revenue drop compared to the first quarter, attributed to a seasonal softer spot market. This impacted earnings for vessels operating in the spot market, highlighting the volatility in short-term market conditions.
Increased Drydocking Costs
Drydocking costs exceeded previous estimates, averaging around $5.7 million per vessel, primarily due to higher costs in Europe compared to Singapore. This increase represents a challenge in managing operational expenses.
Challenges in Asian LNG Imports
Asian LNG imports faced headwinds, with Chinese imports down 19% and Indian imports down 11% year-over-year. These declines were influenced by a demand shift towards Europe and economic conditions in China, presenting a challenge for the company.
Forward-Looking Guidance
Looking ahead, Flex LNG provided guidance for fiscal year 2025, projecting revenues between $350 million to $370 million and TCE per day ranging from $72,000 to $77,000. The company aims for an adjusted EBITDA of $250 million to $270 million. Despite a cautious short-term market outlook, Flex LNG remains optimistic about long-term growth and is committed to maintaining a shareholder-friendly dividend policy.
In summary, Flex LNG’s earnings call highlighted a strong financial performance and strategic initiatives aimed at enhancing shareholder value. While challenges such as increased costs and market volatility persist, the company’s solid contract backlog and successful refinancing efforts position it well for future growth. The overall sentiment remains positive, with a focus on sustaining financial stability and capitalizing on market opportunities.