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FLNG
Earnings call · Jun 2026 (Q2 FY26)

Flex LNG Q2 FY26 earnings call FLNG

Aug 19, 2026 Source

Executive summary

Flex LNG Q2 FY26 — Strong Q2 Results Driven by Spot Market Performance and Completed Dry Dockings

Flex LNG delivered strong second-quarter results, driven by robust spot market performance for two vessels and the completion of all scheduled 5-year dry dockings. The company maintained its full-year guidance and declared a consistent dividend, supported by a solid balance sheet and contract backlog. Geopolitical tensions in the Middle East continue to impact LNG flows, while a softer spot market is noted amidst high newbuilding deliveries, though long-term demand remains confident.

Highlights

5

  • Revenues reached $106.8 million (or $102.7 million excluding EUAs), marking the second-best quarter since Q4 2021.

  • Fleet average TCE was $86,100 per day in Q2 FY26, contributing to solid quarterly results.

  • Adjusted net income of $42.5 million or adjusted EPS of $0.79, more than doubled Q1 performance.

  • All scheduled 5-year special surveys for the fleet were completed, with average cost of $6 million per vessel and 17 days in dry dock.

  • Declared a $0.75 per share dividend, marking the 20th consecutive dividend at this level, with $3 per share in last 12 months.

Concerns

3

  • Elevated geopolitical uncertainty in the LNG space due to the Iran conflict, causing disruption to LNG flow from the region.

  • Softer spot market and heavy schedule of newbuilding deliveries, leading to increased vessel availability and pressure on spot rates (Q3 spot market softened from $120,000 to $30,000).

  • European gas inventories are at 61% full, the lowest level in over 15 years, requiring substantial rebuilding ahead of winter.

Guidance & targets

CategoryTargetConfidence
Full-year revenues
$345 million and $370 million
high materiality
High
Full-year TCE
$73,000 and $78,000 per day
high materiality
High
Full-year adjusted EBITDA
$255 million and $280 million
high materiality
High
Full-year OpEx per day
$16,000 per day
medium materiality
High
Hedge ratio
around 70%
low materiality
High

Orderbook & backlog

Minimum firm contract backlog 51 years Q2 FY26

May grow to 78 years if all options are declared

Capital programs

5-year special surveys completed
Period spend: $6 million per vessel
Spent to date: completed all scheduled

Benefit:final 5-year special survey in fleet of 13 vessels

Flex Vigilant completed her dry dock in Denmark in June, and this was the third and final dry docking for 2026. The average cost per dry docking came in around $6 million per vessel as guided, and we spent averagely 17 days in dry dock per vessel.

10-year dry dockings planned

Looking ahead, we have no dry dockings coming up in 2027, and we will commence our first 10-year docking in 2028.

Risks & headwinds

Elevated geopolitical uncertainty and conflict in Iran Throughout 2026

Significant reduction in Qatari and UAE exports (down 63% combined compared to normal levels). Strait of Hormuz believed to remain closed throughout 2026.

Mitigation:Flex LNG vessels have not traded in the Strait of Hormuz since end of February; charterers pay for extra insurance in high-risk areas.

Softer spot market and heavy newbuilding deliveries Near-term (Q3 FY26)

Spot rates normalized after a sharp spike, with pressure over the last few weeks. Q3 spot market softened from $120,000 to $30,000. Order book substantial (285 vessels, 38% of fleet).

Mitigation:Two vessels coming open at end of Q3 are well-positioned for a potential strong winter market; newbuildings are being absorbed by going straight into programs.

Low European gas inventories Ahead of winter season

Inventories at 61% full, lowest in over 15 years (below 73% last year).

Mitigation:Europe will need to keep bidding on Atlantic cargoes, creating a 'tug-of-war' for U.S. LNG exports, which can be positive for ton-miles.

What to watch in Q3 FY26

Strait of Hormuz status

Next quarter (Q3 FY26 earnings call in November)
Current Believed to remain closed throughout 2026.
Target Continued closure or signs of normalization.

Why it matters

Continued closure would create an "interesting market" for LNG shipping, potentially supporting rates.

Well, we believe that Strait of Hormuz will remain closed throughout 2026. So we could potentially look at the interesting market going forward for LNG and other shipping segments.

Q&A highlights

Do Flex LNG vessels trade in the Strait of Hormuz area, and have any been stuck there?

No Flex LNG vessels have traded inside the Strait of Hormuz since the end of February, as charterers are trading elsewhere.

“I'm pleased to confirm that all vessels in the Flex fleet of 13 vessels, none of them have been trading inside since the end of February. So our charterers' clients are trading elsewhere for time being.”

asked by Knut Traaholt (Executives) · answered by H. Foss (Executives)

2 min read 6 chapters

Detailed narrative

Q2 Financial Performance Overview

Flex LNG reported strong Q2 FY26 results with revenues of $106.8 million ($102.7 million excluding EUAs), marking the second-best quarter since Q4 2021. Net income reached $44.9 million ($0.83 EPS), and adjusted net income was $42.5 million ($0.79 adjusted EPS), more than double the first quarter's performance. This improvement was driven by higher spot earnings for Flex Volunteer and Flex Artemis, as well as full-quarter contributions from new contracts for Flex Constellation and Flex Aurora.

Fleet Maintenance and Dry Dockings

The company successfully completed all scheduled 5-year special surveys for its 13-vessel fleet with the dry docking of Flex Vigilant in June. The average cost per dry docking was $6 million per vessel, aligning with guidance, and vessels spent an average of 17 days in dry dock. With no further dry dockings scheduled for 2027, the fleet is positioned for continuous operation, with the first 10-year docking planned for 2028.

LNG Trade Dynamics and Supply Shifts

Global LNG trade volumes were broadly flat year-to-date, down less than 1%. A significant reduction in Qatari exports (down 29 million tonnes) was largely offset by strong growth from the U.S. (up 23% or 14 million tonnes) and other exporters. Industry utilization of export capacity was high at 96% in July (excluding Qatar), indicating tight supply. This shift from the Middle East to the U.S. is positive for shipping demand due to increased ton-miles as volumes move to Asia.

Demand Side and European Inventories

European gas inventories are at 61% full, the lowest level in over 15 years, necessitating significant rebuilding before winter. This creates a 'tug-of-war' for U.S. LNG exports between Europe and Asia, with U.S. LNG being highly flexible. Historically, there have been significant swings in U.S. LNG flows between these regions, and this dynamic is expected to continue, influencing Atlantic cargo pricing.

Newbuilding Market and Project FIDs

Ordering activity for new LNG carriers remains strong, with around 60 vessels ordered year-to-date, despite high newbuilding prices of approximately $250 million. The order book is substantial (285 vessels, 38% of existing fleet), but most are tied to long-term contracts. LNG SPAs signed in H1 2026 are above 30 million tonnes per year, supporting project FIDs, with 28 million tonnes already sanctioned and potential for up to 67 million tonnes in 2026, signaling momentum for the next wave of LNG supply.

Spot Market and Geopolitical Impact

The spot market for modern 2-stroke vessels has seen increasing availability and pressure on rates, with Q3 spot rates softening to $30,000 per day from $120,000 in the previous Q3. However, the number of available vessels is in line with historical averages, suggesting newbuildings are being absorbed. Geopolitical uncertainty, particularly the Iran conflict and its impact on the Strait of Hormuz, is expected to keep the Strait closed throughout 2026, potentially creating a favorable market for LNG shipping.

AI-generated summary of the company's earnings call. Not investment advice.