Flex Lng Ltd. · NYSE:FLNG
Flex Lng — Q4 2023 Earnings Presentation
32 slides from Flex Lng's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter 2023 Result Presentation
Fourth Quarter 2023 Result Presentation February 7, 2024 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS MATTERS DISCUSSED IN THIS PRESENTATION 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 T
Slide 3: Fourth Quarter Highlights
FOURTH QUARTER 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 $28.5 3
Slide 4: "What We Say Is What We Do"
“WHAT WE SAY IS WHAT WE DO” TCE ($/day) Revenues ($m) Adj. EBITDA ($m) Summary of 2023 Completed the first docking in the Q1-2023 $80.2k/day quarter, on time & at cost Completed the last three dockings Q2-2023 $77.2k/day in the quarter, on time & at cost Completed docking program with Q3-2023 $79.2k
Slide 5: Q1-2024 Expected to Be Repeat of Q1-2023
Q1-2024 EXPECTED TO BE REPEAT OF Q1-2023 Guiding for Q1-2024 Key metrics Expectations TCE rate Revenues ~ ~ Adj. EBITDA TCE A E T A 5
Slide 6: We Have Built a Stable Business…
WE HAVE BUILT A STABLE BUSINESS… Quarterly adjusted EBITDA, $m Ramp-up phase and Weak spot market in All 13x vessels on the Build contract backlog, Execute on long-term spot oriented, H1-20 due to COVID, water and capitalize on capitalize on strong contracts, and complete distribute first dividends
Slide 7: …Backed by High Contract Coverage…
…BACKED BY HIGH CONTRACT COVERAGE… 50 years of min charter backlog which may grow to 71 years with charterer’s extension options E V E I F NA F F E F A NA F E NA F F F Extended to 2027 F C F F A F NA F C NA F A F O O 7
Slide 8: …Where Earnings Belong to Shareholders…
…WHERE EARNINGS BELONG TO SHAREHOLDERS… Note: 1) Adjusted EPS is a non-GAAP measure. A reconciliation to the most directly comparable GAAP measure is included in the earnings report 8
Slide 9: …Creating a Snowball Effect of Investing in Flex LNG
…CREATING A SNOWBALL EFFECT OF INVESTING IN FLEX LNG “T f f f , f ”W ff ~280% in Total Shareholder Return1 since NYSE listing June 2019... …a w t u t ff att a t v v v Ru Distribution of dividend yields among Russell 2000 companies: 159% +283% 42% +124% 82% +82% ~11% dividend yield NYSE S T Dividend
Slide 10: Key Operational Figures in 2023
KEY OPERATIONAL FIGURES IN 2023 77 days in dry-docking Operating days and 19 days technical TCE a ($’ / ) OPEX a ($’ / ) off-hire , , , , , , FY FY FY FY Note: TCE and OPEX per day are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the earnings report
Slide 11: Key Financial Figures for 2023
KEY FINANCIAL FIGURES FOR 2023 Revenues, $m Adjusted EBITDA, $m Adjusted net income, $m FY FY FY FY FY FY Note: Adj. EBITDA and adj. net income are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the earnings report 11
Slide 12: 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 12
Slide 13: Robust and Clean Balance Sheet
ROBUST AND CLEAN BALANCE SHEET • 13 modern LNGCs (9x MEGIs, 4x X-DFs) • Average fleet age of 4.1 years as per end Q4 • Ample cash position of $411m • Book equity ratio of 31% although the fleet was acquired at historical low prices compared , ’ k q , values thus reflect historical cost adjusted with
Slide 14: Flexible Funding Portfolio with No Maturities Prior 2028
FLEXIBLE FUNDING PORTFOLIO WITH NO MATURITIES PRIOR 2028 Resilience: Debt position Q4-23, $m • No debt maturities prior 2028 ( ) • Sound split between traditional bank financing and leasing , , • Geographically diverse set of lenders (US, Europe & Asia) L T CF T C N Optionality: • Attractive loan te
Slide 15: Interest Rate Risk Managed by Active Hedging Strategy
INTEREST RATE RISK MANAGED BY ACTIVE HEDGING STRATEGY Hedge ratio1 Q4-23, $m S • Balance sheet value of interest rate swap portfolio totals $48.8m F , • The net notional value of the swap H portfolio is $720m, with an average duration of 3.3 years fixed at 1.35% • We have fixed rate leases of ~$200m
Slide 16: 2023 Was Another Eventful Year in Global LNG
2023 WAS ANOTHER EVENTFUL YEAR IN GLOBAL LNG JKM & TTF prices on retreat: • Rebalancing of market fundamentals supported an easing of 1 historical high JKM & TTF spot prices • JKM & TTF dropped to ~$10-11/MMBtu at YE2023, and has now consolidated around the $8-9/MMBtu mark Game of Thrones amongst th
Slide 17: Global LNG Export Volumes Were Up 3% in 2023
GLOBAL LNG EXPORT VOLUMES WERE UP 3% IN 2023 LNG export by largest origin country/region FY2023 LNG import by largest destination country/region FY2023 Q4-23 vs. FY23 vs. Q4-23 vs. FY23 vs. Q4-22: FY22: Q4-22: FY22: +27% +13% E -7% -1% -1% 0% +16% +15% -6% -1% -5% -8% +5% -2% 0% -3% +3% -4% +43% +15
Slide 18: USA Was the Largest Exporter in 2023 with 13% Y/Y Growth
USA WAS THE LARGEST EXPORTER IN 2023 WITH 13% Y/Y GROWTH Changes in LNG export from 2022 to 2023, MT Movers & shakers amongst top LNG exporters in 2023 USA A The US topped the list of LNG exporters in S A 2023, ahead of Australia and Qatar, helped by Freeport LNG coming fully back A B onstream, and
Slide 19: High Inventories Have Eased Pressure in Europe
HIGH INVENTORIES HAVE EASED PRESSURE IN EUROPE Y/Y change in European LNG imports per quarter EU natural gas storage inventory, % of full M 100 FY2020 import: FY2021 import: FY2022 import: FY2023 import: 90 ~85 MT ~83 MT ~127 MT ~125 MT 80 Europe entered winter with ample 70 LNG inventories, relievi
Slide 20: Lower Prices Now Driving Up Demand After Demand Subversion
LOWER PRICES NOW DRIVING UP DEMAND AFTER DEMAND SUBVERSION Change in nat.gas consumption by region & sector, 2023 vs. 2022, MT Y/Y change in European natural gas demand, MT Y/y change, MT Y/y change, % World 6 European demand started to 15% increase in Q4-23 due to lower prices and a cold snap North
Slide 21: Lower LNG Prices Are Creating Demand in Emerging Asia
LOWER LNG PRICES ARE CREATING DEMAND IN EMERGING ASIA Ja a LNG t t at … Y/Y imports from fast growing Asian countries vs. JKM gas price MT MT $/MMBtu 11 3 60 9 2 7 50 5 1 40 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 2020-23 range 2023 2020-23 avg. 30 …while China becomes the single largest
Slide 22: US LNG Export Moratorium: "All Politics Is Local"
US LNG EXPORT MORATORIUM: “ALL POLITICS IS LOCAL” Key liquefaction projects MTPA CP LNG • FERC approval delayed, awaiting full DOE authorization to export • The White House has "paused" the issuance of crucial LNG S P E • Awaiting FERC and DOE approvals export permits, awaiting the Department of Ene
Slide 23: Period of Increased Canalibalism
PERIOD OF INCREASED CANALIBALISM Share of US monthly exports to Asia by route, % Panama Canal authorities Shipping announced reduced companies re-route 100% number of daily transits away from Suez due to the low water levels due to Houthi of Gatun Lake. attacks in the Red 80% Recent rainfall has pav
Slide 24: Red Sea Re-routing Driving Up Sailing Distances
RED SEA RE-ROUTING DRIVING UP SAILING DISTANCES Qatar-Eu v a Ca fG H t v ag b ~ w k… … ba a g ata LNG v u • Traditionally, nearly all Asian LNG exports Ras Laffan to Northwest to Europe move through the Suez Canal Europe via Suez: • Qatari volumes represent ~12% or ~15 MT ~6,500 nm, ~15 days Ras Laf
Slide 25: Spot Rates Follow Seasonal Pattern
SPOT RATES FOLLOW SEASONAL PATTERN Headline (2-stroke) spot rates Average distance voyage: USA cargoes ’ Nautical miles 6,500 2021-23 range 2021 300 2023 2022 2023 2024 5,500 250 Average 2019-23 Sparks + XDF/MEGI 4,500 premium 200 3,500 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 150 # of fixtur
Slide 26: Newbuilding Prices Stabilized, Term Rates in Contango
NEWBUILDING PRICES STABILIZED, TERM RATES IN CONTANGO Source: Fearnleys, Clarkson SIN, SSY 26
Slide 27: High Vessel Growth Near Term…
HIGH VESSEL GROWTH NEAR TERM… 68 vessels ordered in 2023, f significantly down from the Available NBs 145 seen in 2022 (% of orderbook) O U C Propulsion split (orderbook fleet) S k (T ) O MEG X F MEGA Source: Fearnleys, Braemer, Affinity and Clarkson as of end January 2024 27
Slide 28: …But Get Ready for the First LNGC (EEXI)tinction Era
…BUT GET READY FOR THE FIRST LNGC (EEXI)TINCTION ERA # of steam vessels redelivered from contract 2024 FY2025: FY2026: 24x steam turbine LNGCs 25x steam turbine LNGCs 12x steam turbine LNGCs Average vessel age of ~21 years, the oldest being ~34 years2 Note: 1) Excludes steam vessels with extension o
Slide 29: LNG Supply to Grow Rapidly from 2025 and Onwards
LNG SUPPLY TO GROW RAPIDLY FROM 2025 AND ONWARDS Liquefaction capacity already FID’ed and under construction A further ~70 MTPA of capacity close to FID, incl. North Field, Qatar, but also Delfin LNG, MTPA CP2, Commonwealth, Freeport expansion ~159 MTPA of liquefaction capacity currently under const
Slide 30: Received Feb 6, 2024
Received Feb 6, 2024 A A- B B B- C Our Score C- D D- 30
Slide 31: Fourth Quarter Highlights
FOURTH QUARTER 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 $28.5 31
Slide 32: Thank you! Q&A
Ww Thank you! S Q&A