Q2 2026 FLEX LNG Ltd. Earnings Call Transcript
Key Points
- Strong Q2 2026 results with revenues of $107 million and fleet-average TCE of $86,100 per day, marking the second-best quarter since Q4 2021.
- Adjusted net income of $42.5 million, more than double Q1 2026, driven by higher spot earnings and new contracts.
- Completed all scheduled five-year special surveys for the fleet, with no dry dockings in 2027, reducing future operational disruptions.
- Maintained a robust contract backlog of 51 years of minimum-firm coverage, with 89% coverage for remaining 2026 days.
- Declared a dividend of $0.75 per share, marking the 20th consecutive quarter, with a dividend yield of approximately 9.7%.
- Strong balance sheet with $397 million in cash and a book-equity ratio of 27.4%, providing financial flexibility.
- Positive market outlook due to low European gas storage levels and the third wave of US LNG export capacity, which could boost shipping demand.
- US LNG export growth (up 23%) and the shift to Atlantic Basin supply are expected to have a positive ton-mile effect.
- No vessels trading in the Strait of Hormuz since February, avoiding geopolitical risks and associated insurance costs.
- Interest expense improved due to lower loan margins and active management of RCF facilities.
- Elevated geopolitical uncertainty, particularly the Iran conflict and Strait of Hormuz closure, which is expected to persist through 2026.
- Softer spot market in Q3 2026, with rates declining from $120,000 to $30,000 per day, pressuring near-term earnings.
- Heavy schedule of newbuilding deliveries, with an order book of 285 vessels (38% of existing fleet), increasing vessel availability and competition.
- Global LNG trade volumes are flat year-to-date, down less than 1%, indicating limited demand growth.
- Qatari exports are down 29 million tons, and combined Qatar/UAE exports are down 63%, disrupting supply and creating market uncertainty.
- European gas inventories are at the lowest level in over 15 years (61% full), requiring significant rebuilding ahead of winter, which could strain supply.
- Vessel OpEx increased quarter-over-quarter due to higher crew travel costs related to Middle East disruptions.
- The company maintains an 'orange' market outlook, reflecting a softer spot market and heavy newbuilding schedule.
- Two vessels (Flex Artemis and Flex Volunteer) are open for new contracts, and marketing them in a weak spot market may result in lower rates.
- Future dividends are subject to Board discretion and market conditions, with no guarantee of maintaining the $0.75 per share level.
Welcome back to Flex LNG's second-quarter 2026 results presentation. Hope you all have a great summer.
My name is Marius Foss. I'm the CEO of Flex LNG. And today, I'm joined by our CFO, Knut Traaholt, who will walk you through the financials later in the presentation.
Today, we will summarize the second-quarter results and provide an update on the LNG shipping market. As always, we will conclude this webcast with a Q&A session.
(Event Instructions)
Before we start, we would like to highlight the following:
We are using certain non-GAAP measures such as TCE, adjusted EBITDA, and adjusted net income. These are supplements to the earnings reported in accordance with US GAAP.
The reconciliations of these non-GAAP measures are available in the earnings report released today.
There are also limitations to the
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