FLEX LNG Ltd. Q4 FY2024 earnings call

• Revenues aligned with guidance, with $1.4 million tied to EU ETS. • Two ships, Flex Resolute and Flex Courageous, had their charters amended with extended firm periods. • A new 15-year time charter for Flex Constellation is set to start in Q1 or Q2 2026. • Refinancing of $430 million was completed, releasing $97 million in cash, extending debt maturities, and reducing interest costs. • A dividend of $0.75 per share was declared, with total dividends over 3.5 years amounting to $610 million. • Lost time injury frequency was zero in 2024, demonstrating strong safety performance.

Revenues were $90.9 million, with $1.4 million related to EU ETS. The time charter equivalent earnings (TCE) for the fourth quarter was $75,300, and close to $75,000 for the full year. EBITDA was in line with guidance. Adjusted net income for the fourth quarter was adjusted for non-cash items, with $15 million for unrealized gains on the interest derivative portfolio and a $0.5 million loss on the FX portion. The cash balance stood at $437 million.

• 2025 revenues are expected to be in line with 2024. • TCE is projected to be in the mid-70s, resulting in revenues ranging from $340 million to $360 million. • EBITDA is expected to be between $250 million and $270 million. • A dividend of $0.75 per share will be paid, maintaining stable dividends.

• Market volatility, including a slump in freight rates. • Trade tariffs, such as China's potential tariffs on U.S. LNG, which could affect cargo distribution. • Old steam ships facing scrapping challenges due to uneconomical operation and environmental regulations. • Complex EU regulations, including EU ETS and FuelEU Maritime, which can impact costs and competitiveness.

Q: Explain the natural gas pricing hubs like Henry Hub, JKM, and TTF?

A: Henry Hub is the main U.S. natural gas index, JKM represents the spot LNG price in Asia, and TTF is the virtual gas hub in Northwest Europe.

Q: Do you see cargo moving between regions based on pricing?

A: In an ideal scenario, with Henry Hub at $3, TTF at $7-8, and JKM at $8-9, cargo movement is incentivized.

Q: Impact of Trump's policies on new FIDs?

A: Projects are ready, with FIDs expected this year, leading to volumes from 2028-2029.

Q: Opportunities in uncommitted newbuilding ships?

A: There are few uncommitted ships, and the company is open to consolidation but is disciplined in acquiring at the right price.

Q: Fleet balancing and scrapping of steam ships?

A: Steam ships are uneconomical, and scrapping is expected to increase, aiding market balance by 2027.