Flex LNG - Fourth Quarter 2022 Earnings Release

February 14, 2023
Hamilton, Bermuda

Flex LNG Ltd. ("Flex LNG" or the "Company”) today announced its unaudited financial results for the fourth quarter ended December 31, 2022.

Highlights:

* Vessel operating revenues of $97.9 million for the fourth quarter 2022, compared to $91.3 million for the third quarter 2022.

* Net income of $41.4 million and basic earnings per share of $0.78 for the fourth quarter 2022, compared to net income of $46.6 million and basic earnings per share of $0.88 for the third quarter 2022.

* Average Time Charter Equivalent¹ ("TCE") rate of $81,699 per day for the fourth quarter 2022, compared to $75,941 per day for the third quarter 2022.

* Adjusted EBITDA¹ of $79.1 million for the fourth quarter 2022, compared to $70.9 million for the third quarter 2022.

* Adjusted net income¹ of $54.5 million for the fourth quarter 2022, compared to $42.2 million for the third quarter 2022.

* Adjusted basic and diluted earnings per share¹ of $1.02 for the fourth quarter 2022, compared to $0.79 for the third quarter 2022.

* In December 2022, the Company has issued 409,741 ordinary shares under the ATM program, for aggregate gross proceeds of $14.8 million or $36.09 per share with aggregate net proceeds of $14.5 million.

* In January 2023, the Company signed 12-year sale and leaseback agreements for Flex Amber and Flex Artemis of $170 million and $160 million respectively, with a margin of 215 basis points per annum.

* In February 2023, the Company signed term sheets for a $180 million 10-year sale and leaseback with an Asian-based lease provider agreement for Flex Rainbow.

* In February 2023, the Company received credit approved term sheets for a $290 million term and revolving credit facility with a margin of 1.85%, a 6 year tenor and a 22 year age-adjusted repayment profile.

* As per date of this report, the Company has SOFR and LIBOR based interest rate swaps with aggregate notional principals of $481 million and $260 million respectively. The weighted average SOFR interest rate is 1.72% with weighted average duration of 6.7 years. Whilst the weighted average LIBOR interest rate is 1.11% with a weighted average duration of 2.3 years.

* The Company declared a dividend for the fourth quarter 2022 of $1.00 per share, consisting of a quarterly dividend of $0.75 per share and a special dividend of $0.25 per share.

Øystein M Kalleklev, CEO of FLEX LNG Management AS, commented:

"We today release the fourth quarter and full year 2022 results for Flex LNG, and we are pleased to report that our Revenues came in at $98 million which was in line with guidance of $95-98 million. Net income was a solid $41 million with an even healthier adjusted net income of $55 million, reflecting the fact that we realized profits on part of our interest rate derivative portfolio prior to long term rates slumping due to lower US Inflation numbers. This resulted in earnings per share and adjusted earnings per share of $0.78 and $1.02 respectively.

During the quarter we continued building attractive charter backlog with minimum 14 years added through an agreement with Cheniere to extend three ships which they already had on Time Charter from us. This agreement added additional earnings visibility to our company. Altogether, we added a total of minimum 38 years of backlog during 2022 through extension of Time Charters with existing customers and our first two fully open positions are now in 2027 which coincide nicely with the next wave of LNG volumes coming to the market in that period. We are therefore upbeat about the prospects for adding additional long term charter backlog for those two ships in due course.

We today also announce that our extensive balance sheet optimization program, which we initiated in November 2021, is now finalized with refinancing secured for the last three ships. As we have added significant charter backlog through 2021 and 2022, we have been able to utilize our de-risked chartering profile to replace all our existing debt with new debt financing with improved terms and conditions. In total, we have secured more than $2bn of new financing during this period and once all the debt is drawn and executed, we expect to release in total $387m in net cash proceeds from this process. This will add further liquidity to our already substantial cash balance. So, with the recent addition of charter backlog coupled with the refinancing process we will have a river of cashflow into a vast pool of liquidity which provides us with ample room to continue paying attractive regular dividends to our shareholders. Given our strong financial position, the Board has therefore decided to pay a special dividend of $0.25 per share in addition to the quarterly dividend of $0.75, bringing the dividend to $1.00 per share for the fourth quarter and in total $3.75 per share declared for 2022. This provides our investors with a solid income stream yielding about 11 per cent.

Going forward we do expect our financial performance to further improve as we are fully booked for 2023. We expect revenues to grow from $348 million in 2022 to around $370 million for 2023, driven by higher Time Charter Equivalent Earnings which we expect to be around $80,000 per day in 2023, an improvement from the $72,800 per day delivered in 2022. Revenues are expected to increase despite us carrying out our first five-year special surveys for four ships with associated off-hire during 2023. Lastly, I would like to extend my gratitude to all personnel both at sea and shore which have contributed to the results presented today.”

Fourth Quarter 2022 Result Presentation

In connection with the earnings release, a live video webcast will be held at 3:00 p.m. CET (9:00 a.m. EST). In order to attend the live video webcast use the following link:

Flex LNG Q4 2022 Webcast

A Q&A session will be held after the conference/webcast. Information on how to submit questions will be given at the beginning of the session.

In conjunction with the quarterly results, we have published a short video in which Øystein Kalleklev, CEO of Flex LNG, discusses the highlights of the fourth quarter. The video can be accessed through the following link:

Flex LNG Q4 2022 Highlights

The presentation material which will be used in the live video webcast can be downloaded on www.flexlng.com and replay details will also be available at this website.

For further information, please contact:
Mr. Knut Traaholt, Chief Financial Officer of Flex LNG Management AS
Telephone: +47 23 11 40 00
Email: ir@flexlng.com

This announcement is considered to include inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. This announcement was published by Knut Traaholt, CFO of Flex LNG, at the date and time set out above.

Forward-Looking Statements

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. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "expect," "forecast," "anticipate," "estimate," "intend," "plan," "possible," "potential," "pending," "target," "project," "likely," "may," "will," "would," "should," "could" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. As such, these forward-looking statements are not guarantees of the Company’s future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements. The Company undertakes no obligation, and specifically declines any obligation, except as required by applicable law or regulation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include: unforeseen liabilities, future capital expenditures, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the LNG tanker market, the impact of public health threats and outbreaks of other highly communicable diseases, including the length and severity of the COVID-19 outbreak and its impact on the LNG tanker market, changes in the Company’s operating expenses, including bunker prices, dry-docking and insurance costs, the fuel efficiency of the Company’s vessels, the market for the Company’s vessels, availability of financing and refinancing, ability to comply with covenants in such financing arrangements, failure of counterparties to fully perform their contracts with the Company, changes in governmental rules and regulations or actions taken by regulatory authorities, including those that may limit the commercial useful lives of LNG tankers, customers' increasing emphasis on environmental and safety concerns, potential liability from pending or future litigation, general domestic and international political conditions or events, including the recent conflict between Russia and Ukraine, business disruptions, including supply chain disruption and congestion, due to natural or other disasters or otherwise, potential physical disruption of shipping routes due to accidents, climate-related incidents, or political events, vessel breakdowns and instances of off-hire, and other factors, including those that may be described from time to time in the reports and other documents that the Company files with or furnishes to the U.S. Securities and Exchange Commission ("Other Reports”). For a more complete discussion of certain of these and other risks and uncertainties associated with the Company, please refer to the Other Reports.

¹ Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss)* and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the end of this earnings report.

Attachment

• Flex LNG - Earnings Release Q4 2022