Flex LNG (FLNG +1.46%) reaffirmed full-year 2025 revenue guidance in the $340 million–$360 million range. The board announced another ordinary dividend of $0.75 per share, while management executed new financing initiatives and highlighted strong contract backlog covering up to 88 years if options are exercised.
Strengthening Balance Sheet with Targeted Refinancing and Cash Release
The balance sheet optimization program aims to unlock an additional $120 million in free cash, and similar plans are underway for financing its ships Flex Resolute and Flex Constellation.
At the end of Q1 2025, the company held $410 million in cash, maintained a book equity ratio backed by modern vessels, and has its first scheduled debt maturity in 2028, following the pending refinancing.
"As announced earlier, we have initiated balance sheet optimization program 3.0 with the aim to free up an additional $120 million in free cash. Today, we also announced that we have secured an attractive JOLCO financing. It's a lease for the [ship] Flex Courageous on the back of the new contract announced last quarter. This financing is expected to be closed in the second quarter and will release about $40 million in cash proceeds, reduce our cost of debt by 1.5% per annum, and further extend our debt maturities."
-- Knut Traaholt, CFO
This refinancing not only lowers average cost of capital but also reduces the average cost of debt and extends maturities, supporting liquidity.
Proactive Interest Rate Hedging Protects Cash Flows Amid Volatility
Flex LNG increased its interest rate swap portfolio to $700 million notional by the end of Q1 2025, representing 70% hedge coverage over the next 24 months; these swaps provide a positive carry of 75%–80% basis points until the Fed begins to cut rates.
Derivative activity in Q1 2025 resulted in a net loss of $7.3 million due to unrealized losses, yet offsetting interest expenses by $3.7 million from realized gains.
"Following the liberation day, there was further volatility and we added an additional $150 million for two years swaps. Increased our swap portfolio to $850 million. These additional swaps were entered into at the weighted average rate of approximately 3.5% and a duration of two years. And these swaps provide us with the 75 to 80 basis point positive carry until the Fed begins to cut rates. If we look at our exposure, we have an ex hedge ratio of about 70% over the next 24 months. And we will continue to monitor the market to add even more exposure if both short-term and long-term rates drop."
-- Knut Traaholt, CFO
This disciplined risk management supports robust dividend returns.
Contract Backlog and Market Dynamics Ensure Resilience Through Cycles
As of May 2025, Flex LNG commands a minimum contract backlog of 59 vessel-years (potentially rising to 88 if charter options are exercised), and the fleet covers thirteen modern LNG carriers averaging 5.5 years in age, booked at historical cycle lows.
Despite softer spot hiring rates, revenue and EBITDA forecasts for 2025 remain underpinned.
"With 59 years of minimum firm backlog, which may grow to 88 years if the charters declare older options."
-- Markus Fos, Interim CEO
This exceptional contractual coverage provides predictability and cushions earnings against short-term spot rate pressure, enabling management to execute accretive capital allocation and maintain high payout ratios.
Looking Ahead
Management reaffirmed full-year 2025 revenue guidance of $340 million–$360 million, and the board declared an ordinary dividend of $0.75 per share, with debt maturities extended and interest costs reduced.
