FLEX LNG Ltd. (NYSE:FLNG) Q3 2022 Results Conference Call November 15, 2022 9:00 AM ET

Company Participants

Oystein Kalleklev - CEO

Knut Traaholt - CFO

Conference Call Participants

Omar Nokta - Jefferies

Anders Karlsen - Kepler Cheuvreux

Oystein Kalleklev

Hi, and welcome to FLEX LNG's Third Quarter Presentation. I'm Oystein Kalleklev, the CEO of FLEX LNG Management, and I will be joined by our CFO, Knut Traaholt, who will run you through the numbers a bit later in the presentation. Following the presentation, we will have a Q&A session where you can either use the web chat function or send a email to ir@flexlng.com. If you have any questions then we will answer some of the question in the Q&A session following the presentation. Before we begin, we just want to highlight our disclaimer regarding forward-looking statements and use of non-GAAP measure, and there are limits to the completeness of detail we can give in this presentation. So please, review also our earnings release together with this presentation.

So let's start with the highlights. Revenues for the quarter came in at $91 million, which was in line with our previous guidance of $90 million. Earnings were strong. Net income and adjusted net income was $47 million and $42 million, translating into earnings per share and adjusted earnings per share of $0.88 and $0.79 respectively. During the quarter, freight and product markets were booming and this affected both short term and long term rates positively. During the quarter, we had three ships commencing new Time Charters. Flex Enterprise and Flex Amber commenced the new seven year Time Charters, which we announced in June and this replaced the shorter term Time Charters we had for these ships prior to this announcement. We also had Flex Aurora, which was delivered as the final fifth ships to Cheniere at the end of the quarter. Our CFO, Knut’s been busy refinancing ships and we have recently secured $630 million of refinancing for four of the seven ships we intend to refinance, and with these refinancings, for only these four ships, we are already surpassing the $100 million target we put in terms of cash release. These four ships altogether will release around $110 million. So for phase one and phase two, we today expect to release a minimum of $300 million of cash release and Knut will give some more details on this shortly.

For fourth quarter, we expect slightly better numbers, driven by Flex Artemis, which is the only ship we have on a variable higher Time Charter. With spot markets booming, we are also making more money on this ship. So revenues for fourth quarter is expected to be somewhere around $95 million to $98 million, also inline with previous guidance of $90 million to $100 million. We have third contract coverage for 2023 and a minimum coverage of 91% for 2024 as we have two ships rolling off charters in the middle of 2024. There is, however, options by the charter to extend these ships, so the first fully open ship we have available today is actually middle of 2026. So with strong contract coverage, strong financial results and a healthy cash balance, our Board has therefore declared our quarterly dividend of $0.75 per share. So far this year, that means we have declared $2.75 per share in dividends, which is also inline with our earnings per share of $2.76. If we add Q4, we have paid $3.5 of dividends for the last 12 months, which implies a yield of around 10% with today's stock price. So as I mentioned, we have a very good coverage. As you can see from our fleet overview, we have two ships, which could possibly come open in 2024. But as I mentioned, there are options by the charters to extend them, these ships.