This article first appeared on GuruFocus .
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Revenue:$106.8 million, or $102.7 million excluding EUAs; second-best quarter since Q4 2021.
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Fleet-Average TCE:$86,100 per day for the quarter.
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Net Income:$44.9 million, or $0.83 earnings per share.
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Adjusted Net Income:$42.5 million, or $0.79 adjusted earnings per share, excluding unrealized gains on interest-rate swaps and FX.
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Cash Flow from Operations:$63 million, up from $37 million in the first quarter.
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Operating Expenses:Average OpEx per day of $16,260 in Q2; $16,100 per day for the first six months.
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Dividend:Declared $0.75 per share, marking the 20th consecutive dividend at this level; last 12 months dividend is $3 per share, implying a yield of around 9.7%.
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Full-Year Guidance:Revenues between $345 million and $370 million; TCE between $73,000 and $78,000 per day; adjusted EBITDA between $255 million and $280 million.
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Dry Docking Costs:Average cost of around $6 million per vessel, with an average of 17 days in dry dock per vessel.
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Cash Position:$397 million at the end of the quarter.
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Debt Repayment:$28 million in scheduled debt installments repaid during the quarter.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Strong Q2 2026 results with revenues of $107 million and fleet-average TCE of $86,100 per day, marking the second-best quarter since Q4 2021.
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Adjusted net income of $42.5 million, more than double Q1 2026, driven by higher spot earnings and new contracts.
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Completed all scheduled five-year special surveys for the fleet, with no dry dockings in 2027, reducing future operational disruptions.
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Maintained a robust contract backlog of 51 years of minimum-firm coverage, with 89% coverage for remaining 2026 days.
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Declared a dividend of $0.75 per share, marking the 20th consecutive quarter, with a dividend yield of approximately 9.7%.
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Strong balance sheet with $397 million in cash and a book-equity ratio of 27.4%, providing financial flexibility.
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Positive market outlook due to low European gas storage levels and the third wave of US LNG export capacity, which could boost shipping demand.
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US LNG export growth (up 23%) and the shift to Atlantic Basin supply are expected to have a positive ton-mile effect.
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No vessels trading in the Strait of Hormuz since February, avoiding geopolitical risks and associated insurance costs.
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Interest expense improved due to lower loan margins and active management of RCF facilities.
Negative Points
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Elevated geopolitical uncertainty, particularly the Iran conflict and Strait of Hormuz closure, which is expected to persist through 2026.
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Softer spot market in Q3 2026, with rates declining from $120,000 to $30,000 per day, pressuring near-term earnings.
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Heavy schedule of newbuilding deliveries, with an order book of 285 vessels (38% of existing fleet), increasing vessel availability and competition.
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Global LNG trade volumes are flat year-to-date, down less than 1%, indicating limited demand growth.
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Qatari exports are down 29 million tons, and combined Qatar/UAE exports are down 63%, disrupting supply and creating market uncertainty.
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European gas inventories are at the lowest level in over 15 years (61% full), requiring significant rebuilding ahead of winter, which could strain supply.
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Vessel OpEx increased quarter-over-quarter due to higher crew travel costs related to Middle East disruptions.
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The company maintains an 'orange' market outlook, reflecting a softer spot market and heavy newbuilding schedule.
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Two vessels (Flex Artemis and Flex Volunteer) are open for new contracts, and marketing them in a weak spot market may result in lower rates.
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Future dividends are subject to Board discretion and market conditions, with no guarantee of maintaining the $0.75 per share level.
Q & A Highlights
Q: What is the company's outlook for the resumption of LNG exports from Qatar and UAE, and the normalization of transit through the Strait of Hormuz? A: CEO Marius Foss stated that the company believes the Strait of Hormuz will remain closed throughout 2026, which could lead to an interesting market for LNG and other shipping segments going forward.
Q: What are the expectations for the LNG shipping market in the third and fourth quarters of 2026? A: CEO Marius Foss noted that Q3 is typically a shoulder month, with spot rates having softened from around $120,000 to $30,000. The company's next vessels come open at the end of Q3, positioning them for the historically profitable Q4 winter market. He added that if Hormuz remains closed, the market should automatically find its way back to where LNG rates should be.
Q: Does Flex LNG have any vessels trading in the Strait of Hormuz, and have any ships been stuck inside? A: CEO Marius Foss confirmed that none of the 13 vessels in the Flex fleet have been trading inside the Strait of Hormuz since the end of February, as charterers are trading elsewhere for the time being.
Q: Who pays for the additional insurance required for trading in high-risk areas like the Strait of Hormuz? A: CEO Marius Foss explained that if and when ships are ordered to high-risk areas, the extra coverage will be paid for by the charterers who are instructing the vessels to such areas.
Q: When does the company expect to add more interest-rate hedging to its portfolio, and how will it address debt maturities in Q1 2029? A: CFO Knut Traaholt stated that the company trades when markets are favorable and is pleased with its current 70% coverage until mid-next year. Regarding refinancing, it is still early to address the 2029 maturities, but the company continuously evaluates attractive opportunities to improve terms.
Q: What is the outlook for dividend sustainability and future dividends? A: CFO Knut Traaholt reiterated that each dividend is declared by the Board quarterly, based on transparent decision factors. Despite a downgrade in certain market factors, the strong balance sheet, cash position, and contract backlog allowed the Board to confirm a dividend of $0.75 per share for the quarter. Future dividends will be reassessed based on all factors, including the backlog for open vessels.
Q: What drove the significant improvement in second-quarter financial results? A: CFO Knut Traaholt attributed the strong quarter to higher revenues driven by high spot earnings for Flex Volunteer and Flex Artemis, a full quarter of earnings from new contracts for Flex Constellation and Flex Aurora, completion of dry dockings, continued cost control, and improved financial efficiency. Net income came in at $44.9 million, more than double the first quarter.
Q: How is the global LNG trade performing despite the disruption from Qatar? A: CEO Marius Foss noted that global LNG trade volumes are broadly flat year to date, down less than 1%. The significant reduction in Qatari exports (down around 29 million tons) has been largely offset by strong growth from the US (up 23% or close to 14 million tons), as well as growth from Australia, Russia, and other exporters. This shift towards US supply is positive for shipping demand due to the positive ton-mile effect.
Q: What is the current state of the newbuilding order book and its impact on the market? A: CEO Marius Foss highlighted that ordering activity remains very strong, with around 60 newbuildings ordered so far this year, many without employment contracts. The order book stands at around 285 vessels, equivalent to roughly 38% of the existing fleet, but the majority are tied up with Qatar or other long-term employment. Elevated newbuilding prices continue to support the value of modern existing tonnage.
Q: What are the key factors influencing the spot market for modern two-stroke LNG carriers? A: CEO Marius Foss explained that increasing vessel availability in both West and East of Suez is putting weight on spot rates, although the number of available vessels is in line with five-year historical averages. The sharp spike in rates earlier in the year has normalized, with some pressure seen in recent weeks. The company expects historical seasonal tightening in the second half of the year, positioning its two open vessels well for a potential strong winter market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
