Flex Lng Ltd. · NYSE:FLNG
Flex Lng — Q1 2024 Earnings Presentation
27 slides from Flex Lng's earnings presentation, May 23, 2024
Slide 1: First Quarter 2024 Result Presentation
First Quarter 2024 Result Presentation May 23, 2024 1
Slide 2: Disclaimer
DISCLAIMER Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business.
Slide 3: Q1 Highlights
Q1 HIGHLIGHTS Note: 1) Adjusted net income, adjusted EPS and TCE are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the earnings report, 2) LTM dividend yield assuming a share price of $29 3
Slide 4: Q1 Results in Line with Guiding
Q1 RESULTS IN LINE WITH GUIDING Q1-2024 Key metrics Guiding Actuals Guiding for Q2-2024 TCE rate ~$75-80’/day ~$76,500/day ~$72-74’/day Revenues ~$90m $90.2m Close to $85m Adj. EBITDA ~$70m $70.6m Close to $65m • 5-year special survey of Flex Constellation successfully completed in Drydock April, ac
Slide 5: Drydocking According to Plan
DRYDOCKING ACCORDING TO PLAN • Flex Constellation completed her 5-year special survey in April, and traded in a challenging spot market for a short period, before commencing a firm TC of 312 days + 1-year charterer’s option • Flex Courageous progressing according to schedule and budget. She is now c
Slide 6: High Contract Coverage and Earnings Visibility
HIGH CONTRACT COVERAGE AND EARNINGS VISIBILITY… 50 years of minimum firm charter backlog which may grow to 69 years with charterer’s extension options 0 4 0 0 0 7 0 8 0 E y V 4 4 4 4 4 4 E d I Flex Rainbow N Flex ndeavour Flex igilant Flex mber N Flex nterprise N Flex Freedom Flex Resolute Extended
Slide 7: Support Stable Attractive Dividend
…SUPPORT STABLE ATTRACTIVE DIVIDEND… Quarterly dividend, $m $ m in dividends last three years and counting… pecial dividend Ordinary dividend 7
Slide 8: And Earnings Belong to Shareholders
…AND EARNINGS BELONG TO SHAREHOLDERS Spot market is weaker this year dragging down the front-end of the rate curve, while long term rates have stabilized at healthy levels. This is a key reason for us adding near term coverage. Note: 1) Adjusted EPS is a non-GAAP measure. A reconciliation to the mos
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Note: 1) Adjusted EBITDA, adjusted net income, adjusted EPS and TCE are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the earnings report 9
Slide 10: Adjusted Net Income of $37.9M in the Quarter
ADJUSTED NET INCOME OF $37.9M IN THE QUARTER Adjusted net income bridge, $m RELEVANT PERFORMANCE METRIC EPS: $0.62/share EPS: $0.70/share $ . $ . $ . $ . $ . Net income ( ) nreali ed gain ( ) F loss ( ) Cash proceeds d usted net income from change in fair value from termina on of swap of deriva ves
Slide 11: Cash Position Remains Robust
CASH POSITION REMAINS ROUBST Cash flow Q4-2023 to Q1-2024, $m Temporarily Temporarily build-up build-up ofof NWC NWC due duetotoprepayment prepayment ofof DD drydock costs, costs, and and timing timing of TCofhire TC hire payments. payments. Note that instalments ~$7.5m higher than depreciation due
Slide 12: Flexible Funding Portfolio with No Maturities Prior 2028
FLEXIBLE FUNDING PORTFOLIO WITH NO MATURITIES PRIOR 2028 Resilient balance sheet: Debt position Q1-24, $m • No debt maturities prior 2028 • Sound split between traditional bank financing ( ) and leasing • Geographically diversified set of lenders , , Strategic optionality: • Attractive loan terms •
Slide 13: Our Sixth Annual ESG Report Released Today
OUR SIXTH ANNUAL ESG REPORT RELEASED TODAY • We publish our sixth annual ESG report according to SASB guidelines, which includes information about: • Environmental footprint of fuel use • Ecological impacts • Business ethics • Health & safety • Key accomplishments in 2023 include reduced fleet emiss
Slide 14: Lower European Pull Spur Asian Demand
LOWER EUROPEAN PULL SPUR ASIAN DEMAND Top LNG exporters, YTD April 2024, MT -3% +1% -20% Top LNG importers, YTD April 2024, MT -1.2 MT +0.9 MT -9.3 MT % = Percentage change YTD-24 from YTD-23 + MT = Absolut change YTD-24 from YTD-23 39 China and emerging Asia are soaking +4% +15% up LNG available du
Slide 15: Cheaper LNG Is Creating New Demand
CHEAPER LNG IS CREATING NEW DEMAND $/MMBtu 35 30 Given world’s LNG demand, if price of LNG is reduced 50%, importers save approx. $215bn p.a. However, ~2/3 of LNG is being sold under 25 long term contract linked to oil which is generally more stable than spot LNG 20 Spot LNG cheaper than contracted
Slide 16: Asia Replaced Europe as the LNG Demand Sink
ASIA REPLACED EUROPE AS THE LNG DEMAND SINK European LNG imports, YTD-2024, MT Asian LNG imports, YTD-2024, MT 15 30 12 27 9 24 6 21 3 18 Declining LNG prices help to reboot A mild winter, ample storage levels, demand subversion and significant contribution from demand from developing countries in r
Slide 17: Europe's LNG Demand Still Living on a Prayer
EUROPE’S LNG DEMAND STILL LIVING ON A PRAYER EU natural gas storage inventory, % of full European LNG suppliers by country, MT 100 58% 66% 63% 90 80 70 60 50 40 Current EU storage levels at 67%. However, the bloc 30 remains significantly spot exposed, with 58-66% of its 20 total LNG demand currently
Slide 18: Bottlenecks Create Longer Sailing Routes
BOTTLENECKS CREATE LONGER SAILING ROUTES LNG export by sailing route, winter season 2023-’ 4 v w t a 0 -’ Qatar to Europe US to Europe: via Suez: 31 MT, +6% 3.4 MT, -61% US to Asia via Suez: US to Asia via 2.3 MT, -10% Qatar to Asia: Australia to Asia: Panama Canal: 34 MT, +5% 41.9 MT, +1% 2.3 MT, -
Slide 19: Middle East Volatility Threatens Critical LNG Supply Route
MIDDLE EAST VOLATILITY THREATENS CRITICAL LNG SUPPLY ROUTE LNG exports from Qatar + UAE, Jan 2023-YTD-2024, MT Amidst ongoing tensions in the Middle East, Iran has repeatedly sia 7 threatened to close the Strait of Hormuz, despite the significant economic impact this would have on its own economy. ~
Slide 20: Russian LNG Expansion Face Sanctions as Capacity Set to Double
RUSSIAN LNG EXPANSION FACE SANCTIONS AS CAPACITY SET TO DOUBLE Russian liquefaction capacity, MTPA Commentary: • Russian liquefaction capacity is set to double by 2030, Operational 74 Russia was the 4th largest LNG OB LNG increasing from ~36 MTPA to more than 74 MTPA in Under construction exporter w
Slide 21: Growing Coal Demand Despite High Emissions Intensity
GROWING COAL DEMAND DESPITE HIGH EMISSIONS INTENSITY Total coal consumption 2022 vs. 2023, MT GHG emission intensity of primary fuels in Europe , , , , , kg CO2e/MWh , , China , , India , Rest of C LNG ipeline gas ( ) Coal GHG emission intensity of primary fuels in Asia kg CO2e/MWh Rest of merica To
Slide 22: Newbuilding Prices Stabilized, Term Rates in Contango
NEWBUILDING PRICES STABILIZED, TERM RATES IN CONTANGO Source: Fearnleys, Clarkson SIN, SSY 22
Slide 23: We Are Insulated from High Vessel Growth Near Term
WE ARE INSULATED FROM HIGH VESSEL GROWTH NEAR TERM of essels Available NBs (% of orderbook) On order elivered Includes QatarEnergy’s 18 QC-Max-size LNG U d Commi ed vessels with delivery between 2028 and 2031 Live fleet by age years years years years Source: Affinity, Fearnley and Clarksons 23
Slide 24: Spot Rates Follow the Seasonal Trend, Steamers Close to Opex
SPOT RATES FOLLOW THE SEASONAL TREND, STEAMERS CLOSE TO OPEX Spot rates 2- t k , $’000/day 300 250 200 150 Spot rates for steam ships close to OPEX levels, watch out for scrapping 100 50 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Week 2023 2024 Average 2019-23 Sparks
Slide 25: Third Wave of LNG Will Add >200 MTPA in New Capacity
THIRD WAVE OF LNG WILL ADD >200 MTPA IN NEW CAPACITY Liquefaction supply, MTPA 800 1st wave: 2nd LNG wave: 3rd LNG wave: 2006-’10 2015-’20 2025-’30 700 Qatar adds Australia adds ~40 ~50 MT MT, and US add 600 >60 MT 500 USA 400 Australia 300 Qatar 200 100 Other 0 2005 2010 2015 2020 2025 2030 Source:
Slide 26: Q1 Highlights
Q1 HIGHLIGHTS Note: 1) Adjusted net income, adjusted EPS and TCE are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the earnings report, 2) LTM dividend yield assuming a share price of $29 26
Slide 27: Thank you! Q&A
Ww Thank you! S Q&A