FLEX LNG Ltd.

Hi everybody and welcome to fourth quarter results presentation for FlexLNG. It's February 14th, Valentine's Day. So I'm Øystein Kalle Klev. I'm the CEO of FlexLNG Management and I will be joined by our CFO Knut Rohr Holt who will give you some more details on the numbers a bit later in the presentation. The presentation will be concluded with a Q&A session. And as you might recall, the best question this round will get the original Flexington Bedlin set for two people. So I hope you can provide some questions either by sending us an email on ir.flexlng.com or just use the Q&A button in the webcast. So before we begin, I just want to remind you about our disclaimer related to forward-looking statements. We do provide some non-gap measures and of course the detail level we can provide here is limited given the time. So with that, let's review the highlights. Revenues for the quarter came in at 98 million in line with previous revenue guidance of 95 to 98 million, where our numbers this quarter was boosted by our index chip in a booming spot market. Net income and adjusted net income came in at 41 and 55 million respectively, where the main difference is we realized gains of 14 million on derivatives during Q4. Earnings per share and adjusted earnings per share was 0.78 and $1.02 respectively. In November last year, we announced the extension of three ships with Chenier, where we added a minimum of 14 years of contractual backlog to an already rather sizable backlog. Knut will tell you today that we have finalized our balance sheet optimization program. He is presenting refinancing of three last ships in our fleet. And altogether, the balance sheet optimization program will have released 387 million of cash. For next quarter, Q1, we expect revenues to be in the region of 90 to 93 million as we are doing our first scheduled dry docking of Flex Enterprise at the end of Q1. And altogether this year, we will dry dock four of our ships. Nevertheless, we do expect revenues to increase regardless of that or fire. Revenues expected to be in the region of $370 million for the year driven by higher time charter equivalent earnings, where we expect average time charter equivalent earnings to be about $80,000 compared to $72,800 for 2022. EBITDA numbers are also expected to increase with a similar amount compared to 2022. So with a healthy backlog, a very sound financial position, we are again declaring an ordinary dividend of 75 cents, but also a special dividend of 25 cents, bringing the dividend per share to $1. and for the full year 2022 that means dividend of 3.75 dollars 200 million dollars of dividend and that implies a dividend given the share price level today of around 11 percent yield which could should give you investors are attractive yields being invested in flex lng So let's review our contractual backlog portfolio. As I mentioned, we did three ships we extended in November with Chenier. This was Flex Endeavor, which was extended until end of 2030, added altogether 5.6 years. Flex Vigilant added 6.4 years, also bringing that to 2030. Those two ships have options to 2033. And then the last ship we extended with Chenier was Flex Ranger, another of the two optional years, bringing that ship until early 2027, which we think is a very attractive position to be in. This is a time where we will have a lot of new LNG coming to the market. And the deliveries today are incredible. earliest 2027 and even into 2028 so we are competing against much more expensive ships with the current yard sticker price today of around 250 million dollars in in 2027 we also have flex constellation fully open this ship is firm until 2024 but the charters has the option to extend the ship up to three years bringing it uh re-delivered to us in Q2 2027 at the latest. So these are the two ships we are marketing for longer term contracts today. And we are upbeat about the prospects given the higher term rates, as I will explain later in the presentation. Last year, we also extended more ships. We extended Flex Rainbow for 10 years, and she just commenced her new 10-year charter in February. And we also extended Enterprise and Amber by seven years starting July last year until 2029. We also have some other ships in the portfolio. Flex Freedom, earliest re-delivery 2027. There's a two-year option on this ship until early 2029. We also have two more ships with Chenier. Flex Aurora, Flex Volontaire, earliest re-delivery 2026. Also have two-year options, bringing them to 2028 potentially. And then we have two more ships on this 3++2 structure, Flex Courageous and Flex Resolute. earliest re-delivery 2025, but this is very likely that these ships will be extended given the contract structure, so we don't expect to get these ships back before 2029. Constellation are already covered, and Flex Artemis is the one ship we have on variable hire contract, which had boosted revenues in Q4, as I mentioned in the highlights. So, looking at our guidance in a bit more detail, you can see our revenues in EBITDA the last couple of years. As we have taken deliveries of ships in 2018, 2019, 2020, 2021, the last ships, of course, our revenues have increased and also the market has improved. For next year, despite, as I mentioned, dry docking of four ships, we do expect revenues to grow by about 20 million and similar for adjusted EBITDA. Looking at our dividend, earnings belong to our shareholders, and I think we have demonstrated that today with a $1 dividend. bringing it to $3.75 in total for the fiscal year 2022, which compares to earnings per share of $3.54, or adjusted earnings slightly below that at $2.83, as we had significant gains on derivatives, which has been unrealized during the year. When it comes to the decision factors for a dividend, I think I've covered this in great detail in the past, but of course it's linked to our earnings, which are strong, The market outlook, which is also strong, we have a very sizable backlog, as I just demonstrated. Our liquidity position, we ended up with a cash position of 332 million, and this will be further boosted by the refinancing, as Knut will shortly explain. Covenants flying with green colors. We don't have any debt maturities before 2028. CAPEX liabilities are limited to the dry docking of the four ships we have this year, but we do expect the dry docking expenses to be at around 18 to 20 million dollars in total. Other considerations, I don't want to jinx it, putting this also fully green, so we keep it light green for now. And that's kind of the highlights for our assessment of the dividend. In terms of safety and quality performance, this is something we care deeply about. We do have a lot of repeating customers coming back, and of course they are doing so because we have very reliable uptime. As you can see here, 99%. 0.9, 99.8 and 100% uptime on our ships, despite, you know, quite challenging operation during COVID. And regardless of that, we keep our ships and the propellers turning. Also in terms of safety, the two most relevant benchmarks are the lost time injury frequency and the total recoverable case frequency. Here also we are measuring very favorable to the LNG data from Intertanko with LTIF of 0.33, 25% lower than LNG. the industry standard, and even better when it comes to total recordable case frequencies, despite a bit uptick in that for 22 for all parts. So with that, I give it to you, Knut, and you can do a review of the financial, and I will come back and go through the market. Thank you.

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