Flex LNG NYSE: FLNG reported first-quarter 2026 net income of $19.5 million, or $0.36 per share, as management said scheduled drydockings and a softer early-quarter spot market weighed on results but improving LNG carrier rates and new contract coverage supported an upgraded full-year outlook.
Chief Executive Officer Marius Foss said the company generated revenue of $80.5 million in the quarter, or $78 million excluding EU Allowances related to the EU Emissions Trading System. Fleet average time charter equivalent, or TCE, was $65,700 per day. Adjusted net income, excluding unrealized gains from interest rate swaps and foreign exchange, was $16.9 million, or $0.31 per share.
“This has been an active quarter for Flex LNG,” Foss said, pointing to additional contract coverage, completed drydockings and a stronger market backdrop. The company’s board declared another quarterly dividend of $0.75 per share, which Foss said marks the 19th consecutive dividend at that level.
Contract Coverage Expands as Aurora, Resolute and Courageous Add Backlog
Flex LNG said it added to its contract backlog during the quarter through several vessel agreements. Foss said the charterer of the Flex Resolute and Flex Courageous exercised two-year extension options from 2027 to 2029, leaving both vessels fully employed until 2032. The charterers also hold additional options that could extend employment to 2039.
The Flex Aurora was fixed on a new two-year firm time charter through 2028 with a “Supermajor,” according to Foss. The agreement includes 2+2+2-year options, potentially extending the charter to 2034 if all options are exercised.
Foss said the Flex Constellation was delivered into its new charter in early March and has begun a 15-year contract. Meanwhile, the Flex Artemis and Flex Volunteer traded in the spot market during the first quarter. Flex Artemis is currently employed on a multi-month contract through the end of September, while Flex Volunteer is fixed on a multi-month contract and is expected to become available in early July.
Overall, Foss said 91% of Flex LNG’s remaining available days in 2026 are now fixed. The company has 54 years of minimum backlog, which could increase to 81 years if charterers declare all options.
Guidance Raised on Stronger Spot Market and New Contracts
Flex LNG raised its full-year 2026 guidance, citing additional backlog and a stronger LNG shipping market. Foss said the company now expects revenue between $345 million and $370 million, about 10% above prior guidance. Full-year TCE is expected between $73,000 and $78,000 per day, an increase of about 8% from the previous range.
Foss initially said adjusted EBITDA is expected between $255 million and $280 million, up about 11%. Later in the presentation, he referenced an adjusted EBITDA range of $225 million to $280 million.
The upgraded outlook follows what Foss described as a sharp reset in the LNG shipping market after “the war in Iran” and the closure of the Strait of Hormuz, which he said led to the shutdown of LNG production in Qatar. Foss said about 20% of global LNG export capacity is currently lost, tightening the market in the short term and benefiting Flex LNG’s open vessels.
In the Q&A portion of the call, Foss said none of Flex LNG’s 13 vessels had been trading inside the Strait of Hormuz and that charterers had selected alternatives during the period.
Drydockings Affect Quarter, Cash Position Remains High
Chief Financial Officer Knut Traaholt said the first-quarter results were softer sequentially, mainly due to seasonally lower revenue, fewer available days and off-hire related to scheduled drydockings of two vessels. He also cited weaker early-quarter spot earnings for the Flex Volunteer and Flex Artemis, partly offset by the start of Flex Constellation’s 15-year charter at a higher rate in March.
Flex LNG completed drydockings for the Flex Volunteer in January and the Flex Freedom in March, both ahead of schedule. Foss said the Flex Vigilant is expected to enter drydock later in May in Europe and will return to charter afterward. The average cost of the three drydockings is expected to be about $6 million.
Traaholt said vessel operating expenses were lower quarter over quarter, with average operating expense close to $16,000 per day in the first quarter. The company maintained its full-year operating expense guidance of $16,000 per day.
During the quarter, Flex LNG generated $37 million in cash flow from operations. The company recorded an $18 million negative change in working capital and $9 million of drydock expenses, repaid $28 million in scheduled debt installments and distributed $41 million to shareholders. Cash declined by $59 million in the quarter, leaving Flex LNG with $389 million at quarter-end. Traaholt said the company maintained book equity of 27%.
Traaholt also said the company’s interest rate derivative portfolio was valued at $20 million at the end of the first quarter, with a notional value of $775 million and an average fixed rate of 2.46%. Since January 2021, he said the swap portfolio has generated realized and unrealized gains of about $137 million.
Management Sees Stronger LNG Shipping Market, But Flags Risks
Foss said global LNG trade volumes grew 3% in the first four months of the year compared with the same period last year, despite reduced Qatari exports. He said lower Middle East volumes were largely offset by stronger supply growth from the U.S., along with continued growth from Australia and other exporters.
On demand, Foss said Europe is importing LNG as it rebuilds inventories ahead of winter, while mature Asian importers remain resilient and China remains soft. He said growing U.S. exports are increasing long-haul cargo flows, supporting ton-mile demand for LNG carriers.
Foss said spot rates moved from about $30,000 per day in February to more than $250,000 per day in March. While the spike has normalized, he said rates remain well above historical levels for this time of year. He also said forward freight agreements and broker assessments indicate a strong spot market through 2026.
However, management kept its market outlook indicator at an “orange” level, citing near-term stress and medium-term uncertainty from a heavy newbuild delivery schedule. Foss said the company also downgraded “other considerations” to orange because of geopolitical risk and uncertainty around the duration of the Iran conflict and normalization of Qatari supply.
The declared dividend will be paid on or around June 11 to shareholders of record as of May 29. Foss said Flex LNG has distributed about $810 million to shareholders since 2021, and its last 12 months of dividends total $3 per share.
About Flex LNG NYSE: FLNG
Flex LNG Ltd is a Bermuda-registered owner and operator of liquefied natural gas (LNG) carriers, offering shipping services to major energy producers and utilities worldwide. Since its establishment in 2006, the company has focused on building a versatile fleet of modern, eco-efficient LNG vessels designed to meet the growing global demand for lower-emission fuel transportation.
The company's core activities encompass time-charter contracts, long-term transportation agreements and spot market voyages.
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