Flex LNG Reports Strong Q2 and Buyback

Flex LNG(NYSE:FLNG) reported Q2 2025 results on August 20, 2025, reporting adjusted net income of $24.8 million ($0.46 per share), a time charter equivalent (TCE) rate of $72,000 per day, and reaffirming full-year 2025 guidance for revenues of $350 million to $370 million and adjusted EBITDA of $250 million to $270 million. Management highlighted a robust contract backlog, key balance sheet optimization initiatives, and the delisting from the Oslo Stock Exchange, all set against ongoing market softness but longer-term industry tailwinds.

Balance sheet optimization boosts Flex LNG liquidity and outlook

Year-to-date 2025, refinancing transactions—including a $175 million Flex Courageous refinancing and new deals for Flex Resolute and Flex Constellation—generated $43 million and are expected to cumulatively free up $132 million in liquidity. Maturities on key debt facilities are being pushed to 2035, substantially extending the maturity profile and reducing the cost of debt to SOFR plus 1%.

"With the closing of these transactions, we are concluding the balance sheet optimization program 3.0 and freeing up SEK 132 million in liquidity, pushing out the maturity profile and reducing the cost of debt. The new financing of Flex Resolute is a Japanese Jolco on the same terms as for the Flex Courageous concluded in May. This addresses our first debt maturity in 2028 and pushes out the maturity date to 2035. The new lease comes with an attractive blended cost of debt of SOFR plus 1%."
-- Knut Traaholt, CFO

Extending debt’s maturity to 2035 and securing funding at SOFR plus 1% greatly enhances Flex LNG’s financial flexibility, lowers near-term refinancing risk, and strengthens the company’s ability to execute growth or capital return strategies irrespective of market cyclicality.

Stable contract backlog insulates Flex LNG from fleet growth risks

The company’s minimum contracted backlog stands at 56 vessel-years, potentially rising to 85 years if all charter options are exercised, with spot market exposure limited to just two vessels by year-end. Nearly all newbuild LNG carriers scheduled for delivery through 2029 are already committed, with less than 30 uncommitted out of 300.

"Looking at our contract coverage, we are very well covered for the next years with fifty-six years of minimum backlog, which might grow up to eighty-five years if the charters declare all the options. As you can see from this slide, we have two vessels in the spot market. Flex Artemis is concluding her last voyage on a current time charter and will be redelivered to us late in August and then go straight into dry dock in Singapore. We are now marking the vessel open ex-dry dock. Flex Constellation has enjoyed some short-term employment since she was delivered to us in late February. She will trade in the spot market until the commencement of her fifteen-year time charter during 2026. In sum, we have a solid contract backlog, which insulates us from a soft short-term market, and we are well-positioned to benefit from increasing LNG volumes coming on stream in the future."
-- Marius Foss

This contractual coverage shields Flex LNG from weaker spot market dynamics and reduces revenue volatility.

Capital returns remain strong as Flex LNG launches buyback and sustains 12% dividend yield

The Board declared a $0.75 per share ordinary quarterly dividend, maintaining the annualized dividend at $3 per share over the last twelve months on a $25 stock price, equivalent to a 12% yield. Management introduced a $50 million share buyback program on August 20, 2025, specifying that this capital return is independent of quarterly dividend policy.

"We announced this morning the launch of a share buyback program for $50 million. Any purchase under the buyback program is made independent of the next dividend considerations for Q3. Lastly, as a reminder, FLEX LNG Ltd. is delisting from Oslo Stock Exchange, and the last day of listing is September 15. We reconfirm our full-year 2025 guidance of revenues of $350 million to $370 million and TCE per day around $72,000 to $77,000 per day. Similarly, we reconfirm our guidance for expected adjusted EBITDA of approximately $250 million to $270 million for the full year. The Board has declared a 75% share dividend, resulting in the last twelve months' dividend of $3 per share. This implies a dividend yield of 12% on a share price of $25. The dividend is supported by our fortress balance sheet with $413 million in cash and a solid contract backlog."
-- Marius Foss

The buyback program demonstrates disciplined capital allocation alongside a high fixed payout, supported by strong liquidity.

Looking Ahead

Management reaffirmed guidance for 2025 with revenues in the $340 million to $370 million range, TCE between $72,000 and $77,000 per day, and adjusted EBITDA of $250 million to $270 million. Dividend policy remains unchanged, and use of proceeds from refinancing will focus on returning cash to shareholders and preserving balance sheet strength. No new vessel orders are planned unless charter-backed, due to unattractive economics for speculative newbuilds at current term rates.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,055%* — a market-crushing outperformance compared to 183% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 18, 2025

This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.