Flex LNG beats estimates, sees results near lower end of guidance

By Grace Kim

What did the quarter show?

$97.38 million in quarterly revenue and $0.65 in earnings per share (EPS) beat FiscalAI consensus estimates of $95.34 million and $0.64, respectively, when Flex LNG reported Wednesday.

The Oslo-managed liquefied natural gas (LNG) shipping company posted a 34.59% net margin (profit as a share of revenue) and a 16.67% return on equity (ROE, profit relative to shareholders’ equity).

At its conference call, management called the period the company’s “strongest third-quarter results ever,” supported by $97.4 million in revenue, an average fleet time-charter equivalent rate (TCE, a standardized daily earnings measure) near $79,000 and adjusted net income of $35 million.

Strong spot-market earnings and no dry-dock offhire days (revenue-losing maintenance stoppages) helped the result.

Takeaway: The revenue and EPS beat came with high margins and strong spot-market earnings, without a dry-dock interruption.

How are the dividend and financing structured?

The board declared another $0.75-per-share quarterly dividend, marking the 21st consecutive quarterly payment at that level. The company says it has distributed more than $900 million since 2021.

Shareholders of record on Friday, November 27, will receive payment on Thursday, December 10. November 27 also is the ex-dividend date. The $0.75 payment annualizes to $3.00, indicates an 11.6% yield (annual dividend divided by share price) and leaves the payout ratio (dividend relative to earnings) at 157.89%.

New financing for Flex Enterprise is expected to release about $34 million in liquidity at a blended cost of the Secured Overnight Financing Rate (SOFR) plus 25 basis points, or 0.25 percentage points. Amended leases for Flex Artemis and Flex Amber reduce margins and quarterly repayments.

Takeaway: Cash returns remain substantial, while new financing adds liquidity and the amended leases lower scheduled payments.

What changed in the full-year outlook?

Management expects full-year results near the “mid-to-lower end of guidance” as a soft spot market meets a heavy schedule of new vessel deliveries. It raised full-year operating-cost guidance to $16,200 per day from $16,000 and flagged greater vessel exposure to spot-market rates.

Longer term, management sees support from upcoming LNG export projects, particularly in the United States. For the next 12–18 months, however, it called the market “choppy” because new vessel supply, geopolitical uncertainty, weather and the timing of Qatari supply normalization may affect shipping demand.

Flex LNG has 48 years of minimum firm contract backlog, potentially rising to 75 years if options are exercised.

Takeaway: The contract book offers long-duration support, but weaker spot rates and incoming vessels will shape the next year.

How did shares and financial ratios trade?

On Friday, FLNG traded down $0.08, or 0.3%, and hit $25.75 on 165,551 shares, versus average volume of 471,737.

The report listed market capitalization at $1.39 billion, the price-to-earnings ratio (P/E) at 10.82 and beta (a measure of share-price volatility relative to the market) at 0.24.

The 50-day moving average stood at $29.66 and the 200-day at $29.94. The debt-to-equity ratio (debt relative to equity) was 2.40, while the quick ratio (near-term assets excluding inventory against current liabilities) was 2.64 and the current ratio (current assets against current liabilities) was 2.69.

The 12-month low was $24.14 and the high was $33.40.

Takeaway: The $25.75 Friday trading level sat below both moving averages on lighter-than-average volume.

How did analysts revise their views?

Pareto Securities lifted Flex LNG from “strong sell” to “hold” on Thursday, while Wall Street Zen moved it from “sell” to “hold” in a Saturday, August 22 note.

BTIG Research reiterated “neutral” on Thursday, and Weiss Ratings cut the stock from “hold (c+)” to “hold (c)” on Thursday.

Three analysts rated FLNG Hold and one rated it Sell. MarketBeat.com data showed an average rating of “Reduce” and an average target price of $25.00.

Takeaway: Two upgrades improved the recent rating mix, although the broader average remained cautious.

What business sits behind the numbers?

Founded in 2006 and incorporated in Bermuda, Flex LNG manages its operations from Oslo, Norway. The company owns and operates LNG carriers that move natural gas by sea between producers and customers worldwide, and charters its vessels to energy companies and other participants in the LNG market.

Its fleet includes ships equipped with modern propulsion technologies designed for efficient LNG transportation.

Takeaway: Flex LNG combines owned vessels and long-term contracts with greater short-term exposure to shipping rates.