FLEX LNG Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Plex LNG Q1 2020 Earnings Presentation and Investor Day Conference Call. At this time, all participants are in a listen-only mode. After this speaker presentation, there will be a question and answer session. And to ask a question during the Q&A session, you will need to press star and 1. I must advise you that this conference is being recorded today, Thursday, 28th of May, 2020. I'd now like to hand the conference over to the first speaker today, Øystein Kalliklev. Thank you. Please go ahead.

Thank you, Maria. Welcome to the 2020 first quarter result presentation for FlexLNG. My name is Øystein Kalliklev, and I'm the CEO of FlexLNG Management. Together with our CFO, Arl Gurvin, I will guide you through today's presentation. A replay of the webcast will also be available at flexlng.com. Flex LNG is a shipping company focused on the growing market for seaborne transportation of liquefied natural gas, LNG, and we are listed both at Oslo and New York Stock Exchange under the ticker FLNG. So, first a disclaimer with regards to, among other, forward-looking statements and completeness of details. The full disclosure is available in the presentation, and we recommend that the presentation is read together with the interim financial reports and our annual report, which are all available at our website. So, let's summarize the highlights today. First of all, I am pleased to say that we delivered Time Charter Equivalent, or TCE, earnings for our ships at approximately $68,000 per day, which is in line with our guidance of close to $70,000 per day. Given the seasonal softening of the market in First quarter and the outbreak of the novel coronavirus, we are satisfied with the trading results for the quarter. TCE of $68,000 per day translates into revenues and adjusted EBITDA of $38.2 and $27.8 million for the quarter. During the first quarter, interest rate levels around the world plummeted due to the adverse economic consequences of the COVID-19 pandemic. This resulted in us booking a non-cash, unrealized mark-to-market loss of approximately $22 million for our portfolio of interest rate swaps. Our portfolio of swaps at the end of the quarter consisted of $485 million hedged for around five years at about 1.5% fixed interest rate. We have so far hedged the interest rate risk for about 50% of our bank loans, So keep in mind that lower interest rates means that our financial expenses will be lower going forward as the other half of the loans have floating interest rates, which is today close to zero. Hence, adjusted for non-cash unrealized items or adjusted net income was 9.3 million for the quarter. This represents clean earnings of about 17 cents compared to 41 cents in adjusted profit per share in the fourth quarter of 2019, when we made $94,000 per day in TCE. Market conditions have so far in 2020 been challenging. We have seen the warmest winter on record in the northern hemisphere, where most gas is consumed, and this, coupled with the coronavirus outbreak, have depressed the price of natural gas worldwide. The pandemic has also adversely affected our ability to carry out crew changes. This means a lot of seafarers have stayed on ships away from their families for a prolonged period of time. So we would like to extend a special thank you to our crew, which have done a fantastic job making sure that our ships have been able to trade without any interruptions and serious incidents during this difficult period. Given the fallout from the COVID-19 pandemic, we are expecting lower trading results in the second quarter. We have so far booked about 97% of our second quarter and expect a TCE of close to $50,000, which is in line with our current cash break-even levels. Given the uncertainty with regards to COVID-19 and the low gas prices with resulting shut-ins of cargoes, we expect that the market in third quarter also will be challenging. Given the high inventory levels in Europe and the contango in gas prices, we think it's probable that the freight market will firm up again once we are approaching autumn. Consequently, the board has decided to suspend the dividend and instead focus on preserving cash. Suspending the dividend has not been an easy decision to make, but given our lackluster stock price, we think it's advisable to keep a substantial cash position to ensure that investors and financiers have full confidence in our ability to perform also in tough market conditions like this. In that regard, we are therefore very pleased to announce that we have agreed a new bank loan of $125 million for FlexVolunteer, as well as a sale-ease-backed transaction of $156.4 million for FlexAmber. Hence, in total 281 million of new financings in place. We have previously said that we would fast track the financing of the last two new buildings, given the level of uncertainty, and now we have delivered on this. With these financing, the 281 million of new loans and the 629 million ECA financing signed in February, we have thus secured about 910 million of financing, which represents on average 130 million of financing for each of these seven new buildings. 910 million also matches very well with the 937 million of remaining capex for the seven new buildings to be delivered over the next 12 months. This leaves us with a net unfunded capex of only 27 million compared to a cash balance of 121 million at quarter end. With this financing, we are very confident that we have a very robust capital structure. We have attractive long-term financing in place for all 13 ships and not a single loan maturity prior to July 2024. Long-term financings are also coupled with the newest, most efficient fleet of ships, which, given the substantial equity invested in the company, have an industry low cash break even, which will be reduced to around $45,000 per day once all ships are delivered. As mentioned in the highlights, COVID-19 has also affected our business and operations. In such a difficult time, we are pleased to say that we have a very capable organization that have been able to run our ships with 100% uptime and no delays despite these challenges. In order to mitigate the situation, we have minimized ship visits. Only critical external ship visits have been allowed, and this relates to piloting, vetting, and service or repairs if needed. We have also been able to utilize video conference tools for remote ship visits. This includes the first ever remote change of management conducted by Classification Society, ABS, for the Flexco Rages on March 27th. Five of our ships are now under the in-house ship management company, and we are planning for the transfer of the last ship, but this has been slightly delayed due to the situation. Onshore, we have established a COVID task force, which meets every morning. This group consists of key personnel who are in constant dialogue with our ships to assess the situation and assist if needed. We have closely monitored our crew for any symptoms, and we are glad to say we have not had any of our crew or onshore personnel testing positive for COVID-19. However, minimizing visits to ships also means that crew rotation has been practically impossible for some time now. This has resulted in prolonged stays for our crew away from their families, and we have therefore been working in close cooperation with relevant bodies to find practical ways of allowing such crew rotations. We are pleased that we are now finally seeing gradual improvements in relation to crew changes and we have so far been able to do limited crew rotation on one of our ships and are planning now for the other ships. We also have new buildings for delivery in the second half of the year with sea trials and mobilization and officers for these ships have gone through quarantine in South Korea at arrival before conducting such trials. There have also been reported delays of ships in dry dock due to the coronavirus, but as our fleet consists of brand new ships, we do not have any dry dockings planned prior to 2023 and are thus not affected by these issues. Okay, then Harald will give us an update on the recent financings as well as the financial numbers before I will be back with some info on the market.

Thank you, Øystein. As mentioned, we are pleased to announce that we have agreed two new financings totaling 281 million post-quart rent and have just arranged financing for all seven new buildings under construction. The first facility is a 125 million term loan and revolving credit facility for the financing of FlexVolunteer, which is scheduled for delivery in the first The five-year facility has a repayment profile of 20 years, in line with our other bank facilities, and will be split into a 100 million term loan and a 25 million revolving facility. We have already entered into interest rate swaps for the full amount on the facility, giving an attractive all-in pricing, including margin, of 3.3% per annum. The second financing is a 156 million 10-year sale and leaseback transaction with an Asian-based leasing house for the new building Flexible Amber, which is scheduled for delivery in the third quarter 2020. The transaction will be priced at LIBOR plus a margin of 3.2% per annum and has an 18-year repayment profile. We will have annual repurchase options commencing on the first anniversary and there is a purchase obligation at the end of the 10-year lease period of 69.5 million. Flex Amber is included under the 629 million ECA facility entered into in February this year, and we intend to utilize the swap option under this facility to replace Flex Amber with the sister vessel, Flex Vigilant, which is the final of our new building scheduled for delivery in the second quarter of 2021. Both financing remains subject to final documentation and customary closing conditions and are expected to be drawn upon delivery of the relevant vessels from the shipyard. We have been active on the financing side the last two years, arranging a total of 1.7 billion of attractive financing for our fleet of 13 latest generation LNG carriers. At the same time, we have diversified our funding base with a mix of bank financing, lease financing and ETA financing, and have also expanded our relationship with some of the leading international financing providers. Having access to several sources of funding is important in the current market and demonstrates our ability to raise finance at attractive terms in an environment where many struggle to raise finance at all. Upon execution of the two latest financings, we will have less than 30 million in net remaining capex against a cash position of 121 million a quarter. The 629 million ECA facility for five of the new buildings also includes an accordion option of up to 10 million per vessel subject long-term employment acceptable to the banks. Following these transactions, we will have a very comfortable debt maturity profile, with the first maturity due in July 2024. The staggered debt maturity profile also mitigates any refinancing risk. Moving on to the income statement, revenues for the quarter came in at 38.2 million, down from 52 million in the previous quarter. The reduction was due to a softer market in line with the seasonal patterns. Adjusted EBITDA for the quarter was 27.8 million, down from 41.6 million in the previous quarter. The result for the first quarter includes a non-cash, unrealized loss on interest rate swaps of approximately 22 million. At quarter end, we had interest rate swaps totaling 485 million at an average interest rate of approximately 1.5%, and a non-cash market-to-market loss was a result of the sharp fall in long-term interest rates during the quarter. All our interest rate swaps relate to financing agreements, and we are not required to post any cash collateral under the agreements when the mark-to-market is negative. We also recorded a non-cash foreign exchange loss on cash deposits held in the Norwegian kronor of 2.3 million in the quarter, due to a substantial weakening of the Norwegian kronor against the US dollar in the quarter. Net loss for the quarter was 14.9 million, Adjusted for the above non-cash items, adjusted net income was 9.3 million, or 17 cents per share. Then moving on to our balance sheet as per March 31st. We had a solid liquidity position of 121 million per quarter end. Our assets consisted of six vessels on the water, with an aggregate book value of approximately 1.1 billion per quarter end. In addition, we have booked vessel purchase repayments of 349 million relating to the seven new buildings under construction, which represents the advance payments on these. Total desktop quarter end was 771 million, of which approximately 36 million is due over the next 12 months and thus classified as current liabilities. Total equity aspect quarter end was 819 million, giving a strong equity ratio of 50%. Looking at our cash flow for the quarter, the operational cash flow was 14 million for the first quarter. The operational cash flow for the quarter was negatively impacted by working capital adjustment, mainly due to less prepaid hire following the softer market in the first quarter compared to the fourth quarter. Scheduled loan installments were 8.3 million. And in addition, we had upfront financing costs of 6.5 million in connection with the 629 million ECA facility signed in February. The dividend for the quarter of 5.4 million, or 10 cents per share, was paid end of March. Adjusted for the negative foreign exchange effect on cash deposits held in Norwegian crowner of 2.2 million, the cash at the end of the quarter thus came in at 120.8 million. And with that, I hand the word back to Øystein, who will give an update on the market. Thanks.