Flex Lng Ltd. · NYSE:FLNG
Flex Lng — Q3 2021 Earnings Presentation
25 slides from Flex Lng's earnings presentation, Nov 16, 2021
Slide 1: Third Quarter 2021 Results Presentation
Third Quarter 2021 Results Presentation November 16, 2021 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: Highlights
HIGHLIGHTS • Market blow-out materialized with strong freight and product market Commercial • Substantial attractive backlog secured providing increased visibility • 13 state-of-the art large LNGC on the water with average age ~2 years • Continued excellent operational performance despite Covid-19 •
Slide 4: We Have Secured Two Additional Attractive Term Charters
WE HAVE SECURED TWO ADDITIONAL ATTRACTIVE TERM CHARTERS • We have agreed with an Energy Major two Time Charter contracts for Flex Courageous and Flex Resolute with a minimum firm contract duration of three (3) years with Charterers option to extend by up to four (4) years (2+2 years) • The ships wil
Slide 5: Don't Execute, Flexecute
DON’T EXECUTE, FLEXECUTE 1 2 3 4 Trader Portfolio player Energy Major Flex Vigilant (1) Flex Constellation Flex Freedom Flex Courageous Flex Aurora (1) Flex Endeavour Flex Volunteer Flex Resolute (option) Flex Ranger Minimum 3 to 3.8 years firm period Minimum 3 years with up to Minimum 5 years with
Slide 6: Sold Out: But Come Back Soon
* SOLD OUT: BUT COME BACK SOON * Expect open end Dec or early Jan 1) Under the TCs with Cheniere, Flex LNG can nominate performing vessels for the TC and the actual vessels might differ from Flex Aurora and Flex Volunteer depending on vessel availability 6 and fleet portfolio management
Slide 7: High Earnings Visibility While Maintaining Market Exposure
HIGH EARNINGS VISIBILITY WHILE MAINTAING MARKET EXPOSURE 7
Slide 8: We Aim to Pay Out Free Cashflow Over the Cycle
WE AIM TO PAY OUT FREE CASHFLOW OVER THE CYCLE We have distributed 103% of earnings the last twelve months notwithstanding delivery of four newbuildings with associated capex while maintaining a healthy cash balance to $138m 8
Slide 9: Q3 Financial Highlights
Q3 FINANCIAL HIGHLIGHTS 1) TCE, adjusted EBITDA, adjusted net income and adjusted EPS are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the Q3-21 earnings report 9
Slide 10: Solid Cash Position With More to Come
SOLID CASH POSITION WITH MORE TO COME Note: Amortizations are higher in Q1 and Q3 due to semi annual repayments under the $629m ECA facility 10
Slide 11: Flex Volunteer Sale & Charter Back Frees Up $38M
FLEX VOLUNTEER SALE & CHARTER BACK FREES UP $38M Counterpart: First class Asian based lease-provider Amount: $160m, net of $55m initial down payment reflecting a market value of $215m which is supported by broker valuations. Transaction to be booked as long-term debt Tenor: 10 years Balloon: Put/cal
Slide 12: $100M Balance Sheet Optimization Program Initiated
$100M BALANCE SHEET OPTIMIZATION PROGRAM INITIATED Debt Profile Targets: ✓ Free up $~100m ✓ Reduce cost of debt ✓ Maintain industry leading cash break even level $100m Ranger RCF/TL $629m ECA Facility Actions: $250m Constellation/Courageous TL Commercial Tranche1 ✓ $160m Flex Volunteer Sale & Charte
Slide 13: LNG Exports Growing 7% Driven by Strong US Exports
LNG EXPORTS GROWING 7% DRIVEN BY STRONG US EXPORTS LNG Exports increased 17MT Jan-Oct y-o-y Number of US monthly cargo cancellations 50 RoW Biggest decline: Norway/Trinidad -3MT each 45 Algeria Biggest gain: Egypt +5MT 40 Nigeria -3MT or 20% decline 35 30 Malaysia 25 Russia 20 USA +22MT ~60% growth
Slide 14: Import Growth Driven by China, South Korea and Brazil
IMPORT GROWTH DRIVEN BY CHINA, SOUTH KOREA AND BRAZIL Significantly less LNG available for Europe Resulting in low natural gas inventories in Europe Biggest gain: 100 RoW +11MT Brazil +5MT (350% growth) 90 80 Europe -9MT ~12% decline 70 60 Taiwan 50 40 India 30 20 S. Korea +6MT ~19% growth 10 0 Japa
Slide 15: Spot LNG Trading at a Big Premium to Oil
SPOT LNG TRADING AT A BIG PREMIUM TO OIL OIL LNG $80 $180 15
Slide 16: Prices and Arbitrage Pulling Cargoes to Asia
PRICES AND ARBITRAGE PULLING CARGOES TO ASIA Arbitrage: $80m TTF: $25 JKM: $30 Henry Hub: $5 Cargo value: Cargo value: Cargo value: $100M $120m $20m India: $28 Arbitrage: $100m Singapore: $29 Full price US cargo typically Henry Hub +15% = $5.75 + tolling fee of $2-3 (however sunk costs) meaning full
Slide 17: Atlantic to Pacific Trade Driving Tonne-Mile All-Time High
ATLANTIC TO PACIFIC TRADE DRIVING TONNE-MILE ALL-TIME HIGH Interbasin-trade1 growing 48% to 54mt Resulting in 18% tonne-mile growth 1) Interbasin defined as trade between Atlantic and Pacific 17 2) Source: Clarksons Platou
Slide 18: Tight LNG Prices Until Summer 2023
TIGHT LNG PRICES UNTIL SUMMER 2023 $/MMbtu 35 30 25 20 15 10 5 0 HHI JKM TTF Brent 13% 1) Source: Platts, EIA and ICE 18 2) Historical TTF defined as Platts DES NEW
Slide 19: Lack of Ships and High Arbitrage Drives Up Spot Rates
LACK OF SHIPS AND HIGH ARBITRAGE DRIVES UP SPOT RATES Freight indices: 160k cbm TFDE roundtrip basis on November 12,2021. MEGI/XDF premium ~$60,000 BLNG3: $278,213 BLNG2: $282,613 BLNG3g: $234,819 BLNG2g: $244,881 Spark 30s: $241,500 BLNG1: $341,555 BLNG1g: $291,060 Tonnage availability: Spark25s: $
Slide 20: Tight Market Pricing in Higher Spot Rates in 2022
TIGHT MARKET PRICING IN HIGHER SPOT RATES IN 2022 $300,000 Headline TFDE/MEGI rates and BLNG2g FFA projections $250,000 $200,000 $150,000 FFA market pricing TFDE 160k cbm average spot earnings for 2022 at $95,000 per day $100,000 $50,000 $- Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 TFD
Slide 21: Improved Spot Market Has Firmed Up Term Rates
AND IMPROVED SPOT MARKET HAS FIRMED UP TERM RATES $140,000 TC rate assessment per day basis prompt delivery $140,000 $120,000 $120,000 $100,000 $100,000 $80,000 $80,000 $60,000 $60,000 $40,000 $40,000 $20,000 $20,000 $- $- Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21
Slide 22: Summary
SUMMARY Revenues of $82m in line with guidance ~$80m Strong Q4 revenue guidance of ~$110m Attractive backlog while maintaining ~30% spot exposure Dividend of $0.75 per share providing attractive 14% yield Positive outlook both shorter and longer term Solid cash position of $138m plus $38m released f
Slide 23: Q&A
Q&A 23
Slide 24: Appendix - Fleet List
APPENDIX - FLEET LIST VESSEL NAME BUILT YARD CAPACITY PROP. BOR 1 FLEX ENDEAVOUR 2018 DSME 173,400m3 MEGI + PRS 0,075% 2 FLEX ENTERPRISE 2018 DSME 173,400m3 MEGI + PRS 0,075% 3 FLEX RANGER 2018 SHI 174,000m3 MEGI 0,085% 4 FLEX RAINBOW 2018 SHI 174,000m3 MEGI 0,085% 5 FLEX CONSTELLATION 2019 DSME 173
Slide 25: Contact Details
Contact Details Flex LNG Management AS 9 Bryggegata 3 0250 Oslo Norway 0 +47 23 11 40 00 Ld www.flexing.com Investor Relations wb www.flexIng.com/investor-home Stock Exchange ws FLNG FLNG LISTED ostossrs += NYSE Ticker: FLNG