Flex LNG : Earnings Results Q1 2024

Interim Financial Information

Flex LNG Ltd.

First Quarter 2024

May 23, 2024

May 23, 2024 - Hamilton, Bermuda

Flex LNG Ltd. ("we", "us", "our", "Flex LNG", or the "Company") today announced its unaudited financial results for the three months ended March 31, 2024.

Highlights:

A summary of our financial highlights for the quarter are below:

		Q1 2024	Q4 2023
Vessel operating revenues		$90.2m	$97.2m
Net income		$33.2m	$19.4m
Earnings per share (basic)	$0.62	$0.36
Cash and cash equivalents		$383.2m	$410.4m
Vessels and equipment, net		$2,202.3m	$2,217.3m
Long-term debt		$(1,786.3)m	$(1,812.1)m
Non-GAAP Measures 1
Time Charter Equivalent rate	$76,539	$81,114
Adjusted EBITDA		$70.6m	$76.2m
Adjusted net income		$37.9m	$37.8m
Adjusted earnings per share (basic)		$0.70	$0.70

1. Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included at the end of this earnings report.

A summary of key events for the quarter:

• In January and February 2024, the charterer of Flex Resolute and Flex Courageous declared their first options, under the time charters, to extend the firm period of each by an additional two years to Q1 2027. The charterer has one further option on each vessel, which would extend the firm contract period to Q1 2029;
• In April 2024, we successfully completed our scheduled drydocking for Flex Constellation on-time and on- budget. Flex Courageous is scheduled to complete her drydocking on-time and on-budget by end of May 2024;
• In April 2024, the charterer of Flex Endeavour exercised an option to extend the time charter by 500 days from the third quarter of 2030 to the first quarter of 2032;
• In May 2024, Flex Constellation commenced a time charter with a large Asian utility and asset backed LNG trader. The charter has a firm period ending in end of Q1 2025 and an option to extend by an additional one year to end of Q1 2026; and
• The Company declared a dividend for the first quarter 2024 of $0.75 per share. The dividend is payable on or about June 21, 2024 to shareholders, on record as of June 10, 2024.

• Flex LNG Ltd. First Quarter Results 2024

Øystein M Kalleklev, CEO of Flex LNG Management AS, commented:

"Flex LNG's first quarter results came in as expected with Revenues of $90.2 million in line with guidance of approximately $90 million. Hence, we are delivering a Net Income of $33.2 million and Earnings per Share of $0.62. Our adjusted numbers, where we primarily adjust for unrealized gains and/or losses on derivatives, were higher with adjusted Net Income of $37.9 million equal to an adjusted Earnings per Share of $0.70.

Revenues came in $7 million lower than during the fourth quarter of 2023, but this was as expected as we recorded lower earnings on the single ship, Flex Artemis, on a variable hire rate, Flex Artemis. The fourth quarter is typically the peak of the LNG freight market, so we tend to generate higher earnings for this ship during this quarter compared to first quarter. Additionally, we took one ship, Flex Constellation, out of service for scheduled drydocking. That said, the Revenues were in line with the Revenues achieved in the first quarter of 2023 for very much the same reasons.

During the year we are pleased to have added substantial backlog through three different charter extensions. The Time Charter agreements for Flex Resolute and Flex Courageous have both been extended from first quarter of 2025 to the first quarter of 2027. The charterer, which is a supermajor, also has an additional option to extend both ships by another two-year period until first quarter of 2029. We also added 500 days to the existing Time Charter for Flex Endeavour with Cheniere, extending the firm period from third quarter of 2030 to first quarter of 2032.

On top of that, we secured a 10 months' Time Charter for Flex Constellation until end of first quarter 2025 where the charterer has the option to extend this ship by one additional year until end of first quarter 2026. Flex Constellation was redelivered from a Time Charter to us in March and we then elected to carry out the five-year special survey of the ship before putting her into the spot market. However, as communicated in our fourth quarter report in February, we expected somewhat more challenging freight market near term due to the glut of newbuilding deliveries. Hence, we deemed it more attractive for us to charter-out the ship until 2025 possibly to 2026 rather than trading her in the spot market given the numerous ships currently engaged in this trade.

In total we have thus added 6.2 years of new backlog so far this year while we have consumed slightly less than five years from existing contracts which means we have continued to add incremental backlog with the firm backlog currently at 50 years which may increase to 69 years in the event the charterers are utilizing all of their extension options. This attractive backlog gives us a very high level of earnings visibility and also insulate us against any near- term market weakness. Given our backlog of an average of four years per ship, our ships will come open in a window where we consider the market balance to be significantly more favorable as the third wave of LNG is coming on stream from end of 2025 onwards. Furthermore, we also expect a substantial uptick in scrapping of older steam tonnage, which are becoming commercially obsolete, and this will further improve market fundamentals.

Given the solid earnings, the substantial backlog and our strong balance sheet with $383 million of cash and no debt maturities prior 2028, the Board is pleased to announce another quarterly dividend per share of $0.75 equal to a quarterly dividend pay-out of approximately $40 million. This means that we have paid trailing twelve months dividends of $3.125 per share which gives our investors a running yield of about 11 per cent. During the last three years, the total dividend declared and paid has thus grown to $510 million."

• Flex LNG Ltd. First Quarter Results 2024

Business Update and Fleet Overview

In January and February 2024, the charterer exercised the first extension options on the Flex Resolute and Flex Courageous, respectively. Both vessels' firm periods are now scheduled to expire in the first quarter of 2027 and the charterer will have one further option, on each vessel, to extend by an additional two years.

In April 2024, the charterer of Flex Endeavour exercised an option to extend the firm period of the Time Charter by 500 days. The vessels' firm period is now scheduled to expire in the first quarter of 2032. As announced on November 23, 2022, in connection with the option extensions in respect of three ships, the charterer has one further option to extend the time charter period by one additional year to the first quarter of 2033.

In April 2024, we successfully completed the drydocking for Flex Constellation in accordance with the guided timing and cost. In May 2024, Flex Courageous commenced her scheduled drydocking, which is expected to be completed by end of May 2024. We are required to drydock each of our vessels every five years. We are scheduled to have four drydockings in 2025, three drydockings in 2026 and no drydockings in 2027.

In April 2024, following its successful drydock, Flex Constellation was employed in the spot market. In May 2024, we signed a time charter agreement for Flex Constellation with a large Asian utility and asset backed LNG trader for a minimum period of 312 days with the firm period scheduled to end in the first quarter of 2025. The charterer has the option to extend the charter by an additional one-year, which could extend the firm period to the end of the first quarter of 2026.

We achieved technical uptime, excluding drydocks, on our vessels of 99.9% in the first quarter 2024.

The firm contract coverage as of the date of this report is 100% for the remainder of 2024 and 91% for 2025. At the date of this report, the aggregate firm contract backlog for the fleet is 50 years based on the earliest charter expirations, which could increase to 69 years if our charterers exercise all of the contracted options.

For the remainder of 2024 and 2025 respectively, we have 7.7% and 13.8% exposure to the spot market, based on available days. The 2024 exposure to the spot market is a result of our market-linked contract for the vessel, Flex Artemis.

• Flex LNG Ltd. First Quarter Results 2024

The following table sets forth an overview of our fleet as of May 23, 2024:

Vessel Name	Year Built	(1)	Cargo Capacity	(2)	Boil off	Charter	(3)	Expiration with	(4)
Shipyard	(cbm)	Propulsion	rate	expiration		Charterer options
Flex Endeavour	2018	HO	173,400	MEGI+PRS	0.075%	Q1 2032		Q1 2033
Flex Enterprise	2018	HO	173,400	MEGI+PRS	0.075%	Q2 2029		NA
Flex Ranger	2018	SHI	174,000	MEGI	0.085%	Q1 2027		NA
Flex Rainbow	2018	SHI	174,000	MEGI	0.085%	Q1 2033		NA
Flex Constellation	2019	HO	173,400	MEGI+PRS	0.075%	Q1 2025		Q1 2026
Flex Courageous	2019	HO	173,400	MEGI+PRS	0.075%	Q1 2027		Q1 2029
Flex Aurora	2020	HSHI	174,000	X-DF	0.085%	Q2 2026		Q2 2028
Flex Amber	2020	HSHI	174,000	X-DF	0.085%	Q2 2029		NA
Flex Artemis	2020	HO	173,400	MEGI+FRS	0.035%	Q3 2025		Q3 2030
Flex Resolute	2020	HO	173,400	MEGI+FRS	0.035%	Q1 2027		Q1 2029
Flex Freedom	2021	HO	173,400	MEGI+FRS	0.035%	Q1 2027		Q1 2029
Flex Volunteer	2021	HSHI	174,000	X-DF	0.085%	Q1 2026		Q1 2028
Flex Vigilant	2021	HSHI	174,000	X-DF	0.085%	Q2 2031		Q2 2033

1. As used in this report, "HO" means Hanwha Ocean (formerly known as Daewoo Ship building and Marine Engineering Co. Ltd.), "SHI" means Samsung Heavy Industries, and "HSHI" means Hyundai Samho Heavy Industries Co. Ltd. Each is located in South Korea.
2. "MEGI" refers to M-type Electronically Controlled Gas Injection propulsion systems and "X-DF" refers to Generation X Dual Fuel propulsion systems. "FRS" and "PRS" refers to Full or Partial Re-liquefaction Systems.
3. The expiration of our charters is subject to re-delivery windows ranging from 15 to 45 days before or after the applicable expiration date.
4. Where charterers have extension option(s) to be declared on a charter; the expiration provided assumes all extension options have been declared by the charterer for illustrative purposes.

Finance update

As of March 31, 2024, the Company had cash and cash equivalents of $383.2 million, which includes in aggregate $400.0 million of fully drawn revolving tranches under the $375 Million Facility and the $290 Million Facility.

As of March 31, 2024, the Company had total long-term debt of $1,786.3 million, with the current portion and non- current portion of long-term debt split as $103.7 million and $1,682.6 million respectively.

The Company shortened the duration of two interest rate swaps by an aggregate 14 years resulting in cash proceeds of $5.0 million and $5.4 million in the first and second quarters 2024, respectively. Both swaps each have a notional principal of $50 million and have fixed interest rates of 1.91% and 2.15%, respectively. The duration of the swaps have shortened from July 2032 to July 2025 for both swaps.

• Flex LNG Ltd. First Quarter Results 2024

ESG Update

Effective management of Environmental, Social and Governance ("ESG") matters is of key strategic importance for the Company. The Company believes that clear guidance and robust control mechanisms are essential to safeguard the proper handling of sustainability risks in its daily operations. The Company has established specific policies and controls to aid the management of employees and partners and compliance with all applicable international and local regulations.

On May 23, 2024, the Company published its ESG report for 2023, which can be found on the Company's website at: https://www.flexlng.com/category/other-reports/. None of the information contained on the Company's website is incorporated into or forms part of this report. The 2023 ESG Report is the Company's sixth comprehensive and stand-alone sustainability report, which provides an opportunity to reflect on the Company's Environmental, Social and Governance journey thus far and look at the developments made in 2023 to further advance in this field. Through the review of Flex LNG's impacts, risks and opportunities and by consulting with key stakeholders, the Company has continued to develop its ESG targets. The report has been prepared in accordance with the Sustainability Accounting Standards Board's (SASB) Maritime Transportation Standard (2023) and with reference to the Global Reporting Initiative (GRI). The SASB standard allows us to identify, manage and report on material ESG topics with industry specific performance metrics. Additionally, the Company's ESG framework reflects the incorporation of the UN Global Compact principles in the Company's general operations and its enhanced ESG management system. In the past, environmental issues have dominated ESG discussions in the shipping industry which have been addressed accordingly within the Company's report. The Company has also disclosed how it monitors climate risks and strategically manage its impact to the CDP. This is a non-profit organization that aids investors and companies globally in ESG disclosure, assessing their environmental footprint and providing a rating based on performance. The Company received a "B" rating from CDP in 2023, which represents an improved score compared to the "B-" rating achieved in 2022, and views its score as an incentive to implement additional measures and expand its current programmes, such as those forming part of the Company's decarbonization journey.

Results for the three months ended March 31, 2024 and December 31, 2023

The Company recorded vessel operating revenues of $90.2 million for the first quarter 2024, compared to $97.2 million in the fourth quarter 2023. The decrease in revenue is primarily due to a seasonal decrease in the spot market rates which affected the variable rate hire contract for Flex Artemis.

Voyage expenses, which include voyage specific expenses, broker commissions and bunker consumption, were $0.6 million in the first quarter 2024, compared to $0.2 million in the fourth quarter 2023.

Vessel operating expenses were $16.7 million in the first quarter 2024, compared to $18.4 million in the fourth quarter 2023. In the fourth quarter 2023, vessel operating expenses were higher due to several vessels reaching

• Flex LNG Ltd. First Quarter Results 2024

milestone running hour intervals, which increased the maintenance and services expense with regards to the auxiliary engines and replacement of swing sets on the engines.

Administrative expenses were $2.5 million in the first quarter 2024, compared to $2.1 million in the fourth quarter 2023.

Depreciation was $18.5 million in the first quarter 2024, compared to $18.8 million in the fourth quarter 2023.

Interest income was $0.9 million in the first quarter 2024, compared to $1.0 million in the fourth quarter 2023.

Interest expense was $26.7 million in the first quarter 2024, compared to $27.7 million in the fourth quarter 2023.

The Company recorded a gain on derivatives of $7.3 million in the first quarter 2024, which includes a net unrealized gain of $0.7 million as a result of a change in fair value of our interest rate swap derivatives and a net realized gain of $6.6 million on interest rate swap settlements in the period. This compares to a loss on derivatives for the fourth quarter 2023 of $11.6 million, which included a net unrealized loss of $18.7 million and a net realized gain of $7.1 million.

The Company recorded a foreign exchange loss of $0.4 million in the first quarter 2024, compared to a $0.3 million gain in the fourth quarter 2023.

The Company recorded a gain to other financial items of $0.1 million in the first quarter 2024, compared to a loss of $0.3 million in the fourth quarter 2023.

Net income for the first quarter 2024 was $33.2 million and basic earnings per share were $0.62, compared to a net income of $19.4 million and basic earnings per share of $0.36 for the fourth quarter 2023.

Adjusted EBITDA1 was $70.6 million for the first quarter 2024, compared to $76.2 million for the fourth quarter 2023.

Adjusted net income2 for the first quarter 2024 was $37.9 million and adjusted earnings per share of $0.70, compared to an adjusted net income of $37.8 million and adjusted earnings per share of $0.70 for the fourth quarter 2023.

The time charter equivalent rate2 for the first quarter 2024 was $76,539 per day compared to $81,114 per day for the fourth quarter 2023.

• Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the end of this earnings report.

• Flex LNG Ltd. First Quarter Results 2024

Results for the three months ended March 31, 2024 and March 31, 2023

Vessel operating revenues were $90.2 million for the three months ended March 31, 2024 compared to $92.5 million for the three months ended March 31, 2023. The decrease in vessel operating revenues was primarily due to lower spot market rates which affected the variable rate hire contract for Flex Artemis.

Voyage expenses, which include voyage specific expenses, broker commissions and bunker consumption, were $0.6 million for the three months ended March 31, 2024 compared to $0.3 million for the three months ended March 31, 2023.

Vessel operating expenses were $16.7 million for the three months ended March 31, 2024, compared to $15.7 million for the three months ended March 31, 2023.

Administrative expenses were $2.5 million for the three months ended March 31, 2024 compared to $3.9 million for the three months ended March 31, 2023. The decrease in administrative expenses is principally due to a decrease in performance related bonuses during the first quarter 2024.

Depreciation for the three months ended March 31, 2024 amounted to $18.5 million compared to $17.6 million for the three months ended March 31, 2023.

Interest income was $0.9 million in the three months ended March 31, 2024, compared to $1.7 million in the three months ended March 31, 2023.

Interest expense was $26.7 million in the three months ended March 31, 2024, compared to $26.3 million in the three months ended March 31, 2023.

Extinguishment costs of long-term debt were $nil in the three months ended March 31, 2024, compared to $10.2 million in the three months ended March 31, 2023. In the first quarter 2023, the Company recorded an unrealized write-off of unamortized debt issuance costs of $8.8 million and direct exit costs of $1.4 million in relation to the extinguishment of the $629 Million Facility and the Flex Amber Sale and Leaseback as part of the Company's refinancings under the balance sheet optimization programme.

The Company recorded a gain on derivatives of $7.3 million in the three months ended March 31, 2024, which includes a net unrealized gain on derivatives of $0.7 million and a net realized gain of $6.6 million. This compares to a loss on derivatives of $2.8 million in the three months ended March 31, 2023, which includes a net unrealized loss of $7.9 million and a net realized gain of $5.0 million. The net unrealized gain or loss on derivatives is primarily derived from the movements in the fair value of the interest rate swaps which will fluctuate based on changes in the

• Flex LNG Ltd. First Quarter Results 2024

total notional amount and the movement in the long-term floating rate of interest during the period. Whereas, the realized gain/(loss) on derivative settlements will be affected by changes in the shorter term floating rate of interest compared to the respective agreements' fixed rate of interest.

The Company recorded a foreign exchange loss of $0.4 million in the three months ended March 31, 2024, compared to a loss of $0.6 million in the three months ended March 31, 2023.

We recorded a gain in other financial items $0.1 million in the three months ended March 31, 2024, compared to an expense of $0.1 million in the three months ended March 31, 2023.

The Company reported a net income of $33.2 million and basic earnings per share of $0.62 for the three months ended March 31, 2024, compared to a net income of $16.5 million and basic earnings per share of $0.31 for the three months ended March 31, 2023.

Adjusted EBITDA2 for the three months ended March 31, 2024, was $70.6 million compared to $72.5 million for the three months ended March 31, 2023.

Adjusted net income3 for the three months ended March 31, 2024, was $37.9 million and basic adjusted earnings per share of $0.70, compared to an adjusted net income of $35.2 million and basic adjusted earnings per share of $0.66 for the three months ended March 31, 2023.

The time charter equivalent rate3 for the three months ended March 31, 2024, was $76,539 per day compared to $80,175 per day for the three months ended March 31, 2023.

Cash Flow for the three months ended March 31, 2024 and December 31, 2023

Total cash, cash equivalents and restricted cash was $383.3 million as at March 31, 2024, compared to $410.5 million as at December 31, 2023.

Net cash provided by operating activities in the first quarter 2024 was $34.9 million, compared to $54.3 million in the fourth quarter 2023. In the first quarter 2024, net income, after adjusting for non-cash items, was $52.3 million compared to $57.5 million in the fourth quarter 2023. The Company had negative working capital adjustments of $13.8 million for the first quarter 2024, compared to negative working capital adjustments of $3.1 million in the fourth quarter 2023.

Net cash used in investing activities was $nil in the fourth quarter 2023 and first quarter 2024.

• Time Charter Equivalent rate, Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) per share are non-GAAP measures. A reconciliation to the most directly comparable GAAP measure is included in the end of this earnings report.

• Flex LNG Ltd. First Quarter Results 2024

Net cash used in financing activities was $61.8 million in the first quarter 2024, compared to $73.5 million used in financing activities in the fourth quarter 2023. The decrease is due to a decrease in dividend payments of $6.7 million in the first quarter 2024, compared to the fourth quarter 2023. In the first quarter 2024, the Company paid a dividend of $0.75 per share and in the fourth quarter 2023, the Company paid a dividend of $0.875, which included a special dividend of $0.125 per share. Additionally, we recorded proceeds from the settlement of an interest rate swap derivative in the first quarter 2024 of $5.0 million.

Balance Sheet as at March 31, 2024

In the three months ended March 31, 2024, the net book value of vessels and equipment was $2,202.3 million compared to $2,217.3 million as at December 31, 2023. The movement is explained by depreciation of $18.5 million and drydocking additions of $3.6 million.

As at March 31, 2024, total long-term debt was $1,786.3 million, compared to $1,812.1 million as at December 31, 2023, of which the current portion of long-term debt was $103.7 million and $103.9 million respectively. The decrease in long-term debt in the three months ended March 31, 2024, was due to a $26.5 million in regular repayment of long term debt offset by $0.6 million from amortization of debt issuance costs.

As at March 31, 2024, total equity was $840.9 million compared to $847.7 million as at December 31, 2023. This decrease in equity consists of dividends paid of $40.3 million, offset by net income of $33.2 million and $0.4 million relating to a share-based compensation.

• Flex LNG Ltd. First Quarter Results 2024