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1 | 2017 1 | 2017 2018 | 1
Interim Report Presentation
Period ending 31 December 2018
28 February 2019
2 | 2017 2 | 2017 2018 | 2
• THIS PRESENTATION (THE “PRESENTATION”) HAS BEEN PRODUCED BY FLEX LNG LTD. ("FLEX LNG" OR "THE COMPANY”), SOLELY FOR PRESENTATION PURPOSES
AND DOES NOT PURPORTE TO GIVE A COMPLETE DESCRIPTION OF THE COMPANY, ITS BUSINESS OR ANY OTHER MATTER DESCRIBED HEREIN.
• THE PRESENTATION DOES NOT CONSTITUTE AN OFFER, INVITATION OR SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR SELL ANY SECURTIEIS. THIS
PRESENTATION IS STRICTLY CONFIDENTIAL AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON.
• NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION INCLUDED HEREIN IS GIVEN BY
THE COMPANY, AND THAT NOTHING CONTAINED IN THIS PRESENTATION IS OR CAN BE RELIED UPON AS A PROMISE OR REPRESENTATION BY THE COMPANY, WHO
DISCLAIM ALL AND ANY LIABILITY, WHETHER ARISING IN TORT OR CONTRACT OR OTHERWISE.
• THE PRESENTATION SPEAKS AS OF THE DATE SET OUT ON ITS FRONT PAGE. THE COMPANY DOES NOT INTEND TO, OR WILL ASSUME ANY OBLIGATION TO, UPDATE
THE PRESENTATION OR ANY OF THE INFORMATION INCLUDED HEREIN.
• THE CONTENTS OF THE PRESENTATION ARE NOT TO BE CONSTRUED AS FINANCIAL, LEGAL, BUSINESS, INVESTMENT, TAX OR OTHER PROFESSIONAL ADVICE. EACH
RECIPIENT SHOULD CONSULT WITH ITS OWN PROFESSIONAL ADVISORS FOR ANY SUCH MATTER AND ADVICE.
• AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE
COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY
STATEMENTS AND INFORMATION IN THIS PRESENTATION.
• THE PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS RELATING TO THE BUSINESS, FINANCIAL PERFORMANCE AND RESULTS OF THE
COMPANY AND/OR THE INDUSTRY IN WHICH IT OPERATES, SOMETIMES IDENTIFIED BY THE WORDS "BELIEVES”, "EXPECTS”, “INTENDS”, “PLANS”, “ESTIMATES” AND
SIMILAR EXPRESSIONS. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION, INCLUDING ASSUMPTIONS, OPINIONS AND VIEWS OF THE
COMPANY OR CITED FROM THIRD PARTY SOURCES, ARE SOLELY OPINIONS AND FORECASTS WHICH ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM ANY ANTICIPATED DEVELOPMENT. THE COMPANY DOES NOT PROVIDE ANY
ASSURANCE THAT THE ASSUMPTIONS UNDERLYING SUCH FORWARD-LOOKING STATEMENTS ARE FREE FROM ERRORS NOR DOES THE COMPANY ACCEPT ANY
RESPONSIBILITY FOR THE FUTURE ACCURACY OF THE OPINIONS EXPRESSED IN THE PRESENTATION OR THE ACTUAL OCCURRENCE OF THE FORECASTED
DEVELOPMENTS. NO OBLIGATION IS ASSUMED TO UPDATE ANY FORWARD-LOOKING STATEMENTS OR TO CONFORM THESE FORWARD-LOOKING STATEMENTS TO
ACTUAL RESULTS.
• THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE
JURISDICTION OF THE NORWEGIAN COURTS.
Disclaimer
3 | 2017 3 | 2017 2018 | 3
Highlights
• Flex LNG reports fourth quarter Revenues of $36.1m in line
with guidance of approx. $35m.
• Significantly improved EBITDA and Net Income of $28.3m
and $15.2m versus $12.7m and $1.2m respectively in third
quarter.
• In connection with a $300m equity raise in October 2018, Flex
LNG acquired five additional LNGCs bringing the fleet size to
13 vessels including newbuildings.
• $250m attractive bank financing secured for Flex
Constellation and Flex Courageous scheduled for delivery in
June and August.
• From very tight market in fourth quarter to soft market in first
quarter. We expect tighter market during 2019 due to glut of
LNG coming online.
• Financial numbers for first quarter 2019 expected to be in line
with third quarter 2018 due to lower headline rates and
utilization.
4 | 2017 4 | 2017 2018 | 4
Unique fleet comprising of 13 modern large 5th generation LNGCs
ME-GI X-DF ME-GI with Full
Reliquefaction System
ME-GI with Partial
Reliquefaction System
High Pressure Low pressure
Endeavour (2018)
Courageous (2019)
Freedom (2020)
Vigilant (2021)
ME-GI and X-DF vessels are the most fuel-efficient and technically advanced LNGCs
Source: Company
Enterprise (2018)
Ranger (2018)
Rainbow (2018)
Constellation (2019)
Resolute (2020)
Reliance (2020) Aurora (2020)
Amber (2020)
Volunteer (2021)
Initial Flex LNG LNGCs
Acquired in 2017:
$329m equity issued Acquired in 2018: $300m equity issued
5 | 2017 5 | 2017 2018 | 5
46
Port
calls
13.9kts ballast
Average
Speed
15,9kts laden
48%
time
spent
laden
0% technical
off-hire 3,334,402cbm
Cargo
78,358,447
MMBTU
TRCF: 0
LTI: 0
LTIF: 0
66 Ship Shore
Compatibility
Studies
The year in numbers illustrate first class operational performance
130,524 NM Ballast
Distance
130,222 NM Laden
Circumference of Earth: 21,639 NM
0%
Sick
leave
Source: Company
6 | 2017 6 | 2017 2018 | 6
Income Statement
• Revenues of $36.1m in line with guidance of approx. $35m implying fleet TCE of about $95kpdr and
spot earnings of about $130kpdr
• Increased revenues due to burgeoning spot marked, with all-time high charter rates reported
• Net income of $15.2m and $11.8m for fourth quarter and full year 2018 respectively
Unaudited Figures in USD, 000 Q4 2018 Q3 2018 YTD 2018
Voyage revenues 36 101 19 008 77 209
Voyage related costs -5 977 -5 167 -26 161
Administrative expenses -1 781 -1 132 -4 639
EBITDA 28 343 12 709 46 409
Depreciation -6 872 -5 477 -17 412
EBIT 21 471 7 232 28 997
Finance income 283 72 607
Finance cost -6 511 -6 124 -17 781
Other financial items -17 -1 -54
EBT 15 226 1 179 11 769
Income tax 12 - 10
Net Income (loss) 15 238 1 179 11 779
7 | 2017 7 | 2017 2018 | 7
• Balance sheet consist of four vessels on the water and nine newbuildings under construction
• Vessel purchase prepayments of $421m relates to the nine newbuildings
• Total interest bearing debt of $455m of which $23m is due next 12 months
• Equity ratio of 64% and very solid liquidity situation given availability of $270m Sterna RCF
Balance Sheet
Unaudited Figures in USD, 000 YE 2018 YE 2017 YE 2018 YE 2017
Newbuildings and capitalized costs 0 594 937 Share capital 5 410 3 680
Vessel purchase prepayment 421 472 72 000 Share premium 1 189 665 885 323
Vessels 812 489 3 Other equity -367 751 -368 902
Total non-current assets 1 233 961 666 940 Total equity 827 324 520 101
Other financial liabilities 431 602 160 000
Total non-current liabilities 431 602 160 000
Inventory 915 1 041
Other current assets 4 413 6 568 Current portion of long-term debt 23 365 0
Cash and cash equivalents 55 097 9 961 Current liabilities 12 095 4 409
Total current assets 60 425 17 570 Total current liabilities 35 460 4 409
Total liabilities 467 062 164 409
TOTAL ASSETS 1 294 386 684 510 TOTAL EQUITY AND LIABILITIES 1 294 386 684 510
8 | 2017 8 | 2017 2018 | 8
Cashflow
• Positive operational cashflow of about $23m
and $ 34m for the fourth quarter and 2018
respectively
• About $ 234m of newbuilding capex in
connection with deliveries during 2018
• About $7m each for Flex Endeavour/Enterprise
• About $110m each for Flex Ranger/Rainbow
• Prepayment of $275m in connection with
acquisition of five newbuildings in October
2018 in connection with the $300m private
placement of new shares
• Raised $ 472.5m of external finance through
bank loans and Rainbow SLB during 2018
• Repaid Sterna RCF in full (outstanding $160m
at beginning of year)
• Thus $270m is currently available under this
facility
Unaudited Figures in USD, 000 Q4 2018 YTD 2018
Net Income (loss) 15 226 11 769
Working capital adjustments 1 320 4 918
Other non-cash items 6 839 17 392
Net cash flow from operating 23 385 34 079
Newbulding capex 1 010 -233 550
Advanced payment for newbuilding assets -275 400 -349 000
Net cash flow used in investing -274 390 -582 550
Net proceeds from issue of shares 295 311 295 311
Net proceeds from issuance of debt - 584 613
Repayment of debt -5 906 -286 069
Other 123 -248
Net cash flow from financing 289 528 593 607
Net cash flow 38 523 45 136
Cash balance at the beginning of period 16 574 9 961
Cash balance at the end of period 55 097 55 097
9 | 2017 9 | 2017 2018 | 9
Attractive take-out financing secured for 2019 deliveries
• $250m post-delivery bank financing secured for Flex Constellation
and Flex Courageous scheduled for delivery June and August 2018
• Blue-chip terms and conditions
• Interest rate of Libor+235bps (margin)
• Loan tenor of five years and repayment profile of 20 years
• Gives attractive average cash break-even of about $45kpdr given
prevailing interest rate level
• Flexible covenants for flexible employment strategy
• No requirement for fixed employment of vessels enabling us to
opportunistically employ the vessels as we see fit
• No financial covenants directly linked to earnings of vessels
• Financial covenants linked to book equity >25%,
• Minimum free liquidity > $25m and 5% NIBD, and
• Positive consolidated WC
• Financing is subject to execution of definitive documentation
and satisfaction of customary closing conditions which is
expected to be finalized by April 2019
10 | 2017 10 | 2017 2018 | 10
136
100 125
30
6
0
20
40
60
80
100
120
140
160
Averageremaning capex
Availableliquidity
Funding needper vessel
Bank leverage
Well capitalized for remaining newbuildings
728
918 146
275
1 225
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Newbuilding capex Pre-paid capex Remaning capex
0 9 18
27 36
45 54
0
10
20
30
40
50
60
TCE50kpdr
TCE75kpdr
TCE100kpdr
TCE125kpdr
TCE150kpdr
TCE175kpdr
TCE200kpdr
$325m of available liquidity $421m of capex pre-paid
Leverage of $100-135m demonstrated And high FCF potential for our LNGCs
$m $m
$m per
vessel
55
270
325
0
50
100
150
200
250
300
350
Cash 31.12.18 Sterna RCFavailability
Available liquidity
$m per
vessel
11 | 2017 11 | 2017 2018 | 11
Freight market has been volatile this winter
• Charter rates for dual fuel 2 stroke LNGC (5th gen) gone from peak of $220kpdr to currently $60kpdr
• Ballast bonus terms considerably less favourable than during start of winter when we could achieve TCEs
above headline rates
Source: SSY, Affinity, Fearnleys and Company
-
50 000
100 000
150 000
200 000
Jan-1
4
Jul-1
4
Jan-1
5
Jul-1
5
Jan-1
6
Jul-1
6
Jan-1
7
Jul-1
7
Jan-1
8
Jul-1
8
Jan-1
9
Spot $/Day
145 cbm steam 160 cbm TFDE 174 cbm DF-2S
Spot Market, daily rates ($)
Type of vessel Atlantic Middel East Pacific
174 cbm 2-stroke 63 000 58 000 58 000
160 cbm TFDE 47 000 42 000 42 000
145 cbm ST 34 000 29 000 29 000
Ballast Bonus
Fuel + 50% Hire
to Hub Fuel only Fuel only
Available vessels per basin
12 | 2017 12 | 2017 2018 | 12
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0,00
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
18,00
20,00
Jan-1
4
Jul-1
4
Jan-1
5
Jul-1
5
Jan-1
6
Jul-1
6
Jan-1
7
Jul-1
7
Jan-1
8
Jul-1
8
Jan-1
9
Henry Hub NBP JKM JKM % Brent (RHS)
And the same is the case for the product market
• Well supplied LNG market due to new capacity and warm winter has resulted in low gas prices throughout
the winter season 18/19. JKM now at 17 months low and 3 year low versus Brent price.
• Due to higher European carbon prices and ample LNG supply, the spread between JKM and NBP/TTF has
been very narrow
Source: Kpler, Bloomberg, Shell and Company
13 | 2017 13 | 2017 2018 | 13
0 1 2 3 4 5
Qatar
Russia
Nigeria
Algeria
USA
Norway
Peru
Winter 17/18 Winter 18/19*
What was different this winter
• Historically, Asian LNG prices (JKM) has been trading at a premium to European gas prices (NBP/TTF)
• This spread adjusted for the cost of shipping is called the JKM netback
• During this winter season, the spread has been negative meaning it’s uneconomical to shift LNG to Asia
• High relative European gas prices and negative JKM netback have resulted in a spike of LNG from US
(≈450%) and Russia (≈350%) routed to Europe meaning lower ton/mileage
Source: Platts, Bloomberg and Company
Continental European LNG import destinations
* Cumulative figures Oct-Mar. Winter 18/19 numbers from 1 Oct to 24 Feb 2019
Up 450% and counting
Up 350% and counting
14 | 2017 14 | 2017 2018 | 14
El Nino conditions have resulted in higher temperatures in Pacific
Source: Australian Bureau of Metrology
Sea Surface Temperature in Pacific
November 2018 December 2018 January 2019
15 | 2017 15 | 2017 2018 | 15
Glut of LNG coming to the market
Source: Bloomberg, Kpler and Company
Year on Year Change LNG Export Volumes Post FID AND Likely LNG Export Projects
0
100
200
300
400
500
600
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
North America Other Russia Africa
Indonesia Malaysia Australia Qatar
Mmtpa
(10)
(5)
-
5
10
15
20
25
30
35
40
2019 2020 2021 2022 2023 2024 2025
Other
NorthAmerica
Russia
Africa
Indonesia
Malaysia
Australia
Qatar
Mmtpa-Post FID
16 | 2017 16 | 2017 2018 | 16
Few available vessels before 2020
• We have registered 103 LNGC orders for delivery in the period until 2021 including 6 Arc 7 LNGCs
• About 38 vessels in total scheduled for delivery in 2019 as eight vessels delivered so far in Q1
• Very limited open vessels before mid-2020
• Increased sailing distances supportive of LNGC demand
Order book for large LNG carriers Average sailing distances (laden)
Source: Fearnleys, Clarksons, DNB and Company
3 600
3 800
4 000
4 200
4 400
4 600
4 800
Nau
tica
l M
iles
2 1
2 1
7
5 6
12
8
6
2
8
9
6 3
2
7
4
6
1
2
2
1
0
2
4
6
8
10
12
14
16
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4
2019 2020 2021
Committed Open
# V
esse
ls
17 | 2017 17 | 2017 2018 | 17
Tonnage demand by key LNG export areas
~1,4 x Vsl
~2,2 x Vsl ~1,5 x Vsl
~2,2 x Vsl
~0,8 x Vsl
~1,2 x Vsl
# of Vessels needed to deliver 1 MT of LNG
gradually increasing as especially US and
Northern Russia (winter) volume grows.
2018/2019 the multiplier is expected to increase
by 2,5%, absolute volume by 9%, fleet by ~10%
Source: Poten, Kpler and Company
2018
New Export MT
2019E
New % split
Supply Country / Region % of Supply Multiplier
Vessel
Demand
Africa 10 % 1,46 0,70 9 %
Australia 22 % 1,16 10,5 12,2 21 %
Qatar 24 % 1,39 23 %
South East Asia 15 % 0,83 14 %
U.S. 7 % 2,19 15,0 32,9 10 %
Row 22 % 1,50 7,0 15,4 23 %
Volume weighted multiplier 1,34 33,2 60 1,37
15%
74%
10% 11%
54% 35%
Americas Asia/MiddleEast
Europe
US LNG destination
Q4-17 Q4-18
18 | 2017 18 | 2017 2018 | 18
Summary and outlook
• Delivered on financial guidance for fourth
quarter with Revenues of $36.1m and Net
Income for the quarter of $15.2m
• Secured financing for the two 2019 LNG
newbuildings at attractive terms
• Expect first quarter numbers to be in line with
third quarter due to soft market early 2019
• Very favorable fundamentals for LNG
transportation
• Flex LNG well positioned with a fleet of 13
modern LNGCs
19 | 2017 19 | 2017 2018 | 19 19 | 2018
Q&A
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