Flex LNG announced its unaudited financial results for the three months ended March 31, 2022.
Highlights:
• Vessel operating revenue of $74.6 million for the first quarter 2022, compared to $114.6 million for the fourth quarter 2021.
• Net income of $55.8 million and basic earnings per share of $1.05 for the first quarter 2022, compared to net income of $69.4 million and basic earnings per share of $1.31 for the fourth quarter 2021.
• Average Time Charter Equivalent1 (“TCE”) rate of $62,627 per day for the first quarter 2022, compared to $95,908 per day for the fourth quarter 2021.
• Adjusted EBITDA1 of $56.3 million for the first quarter 2022, compared to $95.5 million for the fourth quarter 2021.
• Adjusted net income1 of $23.8 million for the first quarter 2022, compared to $62.8 million for the fourth quarter 2021.
• Adjusted basic and diluted earnings per share1 of $0.45 for the first quarter 2022, compared to $1.18 for the fourth quarter 2021.
• In March 2022, the Company signed a $375 million term and revolving credit facility, with an accordion option to increase this by $125 million, secured against an additional vessel. The facility will be secured by the vessels Flex Ranger, Flex Rainbow and Flex Endeavour, while Flex Enterprise is a candidate for the accordion option. In April 2022, the Flex Ranger and Flex Rainbow completed their re-financing with net cash provided to the Company of $11.5 million.
• In April 2022, the Company signed an aggregate $320 million sale and leaseback agreements for the refinancing of the existing facility for the vessels Flex Constellation and Flex Courageous. Completion of the refinancing is expected in May 2022, subject to customary closing conditions in connection with delivery and acceptance of each vessel. The financing is expected to release approximately $99.6 million to the Company.
• In April 2022, Flex Volunteer commenced its time charter agreement as the fourth vessel with Cheniere, as part of the agreements signed in April 2021. The vessel was delivered approximately two months prior to the agreed delivery schedule. The fixed rate time charter has a firm period ending in the first quarter 2026.
• In April 2022, Cheniere declared their option for a fifth time charter agreement for the vessel, Flex Aurora. The fixed rate time charter will commence in the third quarter 2022 with a firm period ending in the first quarter 2026.
• The Company declared a dividend for the first quarter 2022 of $0.75 per share.
Øystein M Kalleklev, CEO of Flex LNG Management AS, commented:
“The first quarter was a fantastic period to be a cargo owner with high demand and elevated prices for LNG given the global energy crunch. For the spot freight market, the first quarter was however challenging as the LNG trade abruptly shifted towards Europe resulting in lower sailing distances and thus higher availability of ships depressing freight economics as liquidity in the spot market also dried up.
The sentiment in the freight market did however turn positive during the end of February and spot rates for modern tonnage have now recovered to above seasonal average while the one-year and three-year Time Charter rates for remains very strong. This is evidencing that charterers are willing to pay a substantial premium to spot rates in order to lock in large fuel-efficient ships on longer periods as the forward market also price in a much tighter freight market in the second half of the year.
During the last 13 months we have successfully secured in total nine fixed hire Time Charters with first class counterparties. The minimum period of these contracts ranges from three to five years which gives us comfortable earnings visibility. We still have three ships which will be redelivered from existing Time Charterers during the next 23 months and given the strong term market and general lack of available modern tonnage we are upbeat about the prospects of re-contracting these ships at attractive terms.
Revenue wise, we are pleased to deliver revenues for the quarter of $74.6 million in line with our revenue guidance communicated in February. With 98 per cent contract coverage for the year and three of our 13 ships on variable hire contracts linked to the spot market, we do expect gradual increased revenues in the next three quarters as we also guided in February. Given the strong backlog, positive outlook and our very solid financial position, the Board is therefore again declaring a dividend for the quarter of 75 cents per share. This provides our shareholders with an annualized yield of around 12 per cent which should be attractive given the wobbly financial markets these days.”