Flex LNG (NYSE: FLNG) reported second-quarter 2026 revenues of $107 million and a net income of $44.9 million, driven by strong spot market earnings and new contract contributions.

The company declared a quarterly dividend of $0.75 per share, marking the 20th consecutive payout at this level. Management maintained full-year revenue guidance between $345 million and $370 million, citing resilient global LNG trade volumes despite geopolitical disruptions in the Middle East.

Financial Performance

Revenues for the quarter reached $106.8 million, or $102.7 million excluding e-rates. This performance was bolstered by high spot earnings from vessels Flex Volunteer and Flex Artemis, alongside full-quarter earnings under new contracts for Flex Constellation and Flex Aurora.

Net income stood at $44.9 million, implying an earnings per share of $0.83. Adjusted net income, which excludes unrealized gains on interest rate swaps and foreign exchange, was $42.5 million, or $0.79 per share. This represents more than double the first-quarter adjusted net income.

Operating expenses saw slight increases due to higher crew travel costs linked to Middle East disruptions. Average vessel operating expenditure was $16,200 per day in the second quarter, compared to an average of $16,100 per day for the first six months of the year. The company maintains its full-year operating expenditure guidance of $16,000 per day.

Balance Sheet and Cash Flow

Flex LNG generated strong cash flow from operations of $63 million in the quarter, up from $37 million in the first quarter. This increase was primarily driven by higher revenues and a positive change in working capital of $19 million, attributed to the timing of advanced charter hire receipts.

The company repaid $28 million in scheduled debt installments and distributed $41 million to shareholders. Net cash flow for the quarter was $8 million, resulting in a cash position of $397 million at the end of the period. The book equity ratio remains robust at 27.4%, with no significant debt maturities until the first quarter of 2029.

Interest expenses improved due to lower loan margins and active management of revolving credit facilities. The company booked $4.7 million in gains on interest rate derivatives, comprising $2.3 million in realized gains and $2.4 million in unrealized gains.

What the Numbers Show

The divergence between reported net income ($44.9 million) and adjusted net income ($42.5 million) highlights the impact of financial hedging strategies. While operational earnings were strong, the inclusion of unrealized gains on interest rate derivatives boosted the headline net profit figure. This suggests that while core shipping operations drove the majority of the profit growth, financial engineering provided a supplementary boost to the bottom line in this quarter.

Market Outlook and Fleet Updates

Global LNG trade volumes remained broadly flat year-to-date, down less than 1% compared to the same period last year. Supply dynamics shifted significantly, with Qatari exports down by approximately 29 million tonnes, offset by a 23% increase in U.S. exports, totaling close to 40 million tonnes. Industry sources report global export capacity utilization at 96% in July, excluding Qatar, which is above the five-year average of 86%.

Geopolitical uncertainties persist, particularly regarding the conflict in Iran and its impact on LNG flows through the Strait of Hormuz. Flex LNG confirmed that none of its 13 vessels have traded inside the strait since late February. The company expects the strait to remain closed throughout 2026.

Fleet operations continued smoothly with the completion of all scheduled five-year special surveys. Flex Vigilant underwent dry docking in June, marking the final such survey for the fleet. No further dry dockings are planned until 2028, when the first 10-year docking will commence. The average cost per dry docking was around $6 million per vessel, with an average duration of 17 days.

Contract coverage remains strong, with 51 years of minimum firm backlog, potentially growing to 78 years if all options are exercised. Near-term coverage stands at close to 89% for the remaining available days in 2026. Flex Artemis and Flex Volunteer are currently trading in the spot market and will become available at the end of the third quarter.

Management maintains an "orange" level for the market outlook, reflecting a softer spot market and heavy newbuilding deliveries. However, low European storage levels, currently at 61% full, support demand ahead of the winter season. The company expects potential improvements in the fourth quarter as seasonal tightening typically occurs.

Flex LNG Ltd (NYSE: FLNG) will present at the Pareto Securities 33rd Annual Energy Conference in Oslo today, September 17, 2026.

Knut Traaholt, Chief Financial Officer, will deliver the presentation. The company operates a fleet of thirteen liquefied natural gas carriers featuring modern two-stroke propulsion systems designed for improved fuel efficiency.

Presentation Details

The event takes place in Oslo. Flex LNG has made the presentation materials available on its website for investors and stakeholders to review alongside the live session.

Fleet Overview

Flex LNG focuses on the liquefied natural gas shipping market. Its current fleet consists of thirteen vessels on the water. All ships utilize latest generation two-stroke propulsion technology, including MEGI and X-DF engines, which offer lower carbon footprints compared to older steam or four-stroke propelled vessels.