Flex LNG (FLNG) Q3 2026 earnings review
Flex LNG reports record third-quarter sales, but charter rates fall
Flex LNG, which rents out gas tankers, posted record third-quarter sales while rates for its ships weakened. Chief executive Marius Foss called it "our strongest third quarter revenues ever", with sales up 14% from a year ago. Yet the shipper kept its full-year outlook, which by our math leaves fourth-quarter sales 4% below last year.
| Sales excluding emissions recharges | $95.2M +13.7% from a year ago |
|---|---|
| Average day rate per ship | $78,875 $70,921 a year ago |
| Profit per share, excluding one-offs | $0.65 $0.43 a year ago |
| Full-year sales outlook | Unchanged by our math, fourth-quarter sales about 4% below a year ago |
⚖️ Verdict: 🔴 Bearish
The story got worse because Flex LNG's firm contracts keep shrinking as rates for new hire drop. Its ships now have 48 years of firm hire left, and four could need new work next year. The good news: the summer topped the company's own plan, and two debt deals cut its interest bill. But that only shows the plan was cautious.
The question now is what those ships will earn next year. Either new US export plants create enough cargoes, or new tankers arrive first and keep rates low. Long-term contracts for Flex Artemis and Flex Volunteer, and the February outlook, will tell.
🐂 Bull Case
Higher Day Rates Lifted Third-Quarter Sales
Flex LNG rents 13 gas tankers to energy companies, and its day rate, what a ship earns daily after voyage costs, drives sales. Two of its ships worked in the spot market, where charterers hire a tanker one voyage at a time.
- Day rate: $78,875, up 11% from a year ago
- Sales excluding emissions recharges: $95.2 million, up 14%
- Days on hire: 1,196, up 3%
Chief executive Marius Foss credited "solid rates from their spot charters". But European gas grew dearer than Asian gas in August, so fewer cargoes went east, the company said. Spot rates then fell to $10,000–20,000 a day by early September.
What to watch: the fourth-quarter day rate, due in February, and the Strait of Hormuz, whose reopening Foss named a swing factor. A rate near last year's level would mean the summer gain has faded.
Cheaper Debt Deals Cut the Interest Bill
Flex LNG owes about $1.8 billion, so its interest rate decides how much of its sales reach shareholders. Chief executive Marius Foss said two new deals "contribute to improving our cost of debt".
In October the shipper cut its lease markup over the base rate for Flex Artemis and Flex Amber to 1.40 percentage points, from 2.15. In November it agreed to sell Flex Enterprise to an Asian lessor and rent it back.
Interest expense fell 14% from a year ago, to about a fifth of sales. But the new lease terms swap smaller payments now for larger sums due when the leases end, so part of the saving is a delay.
What to watch: fourth-quarter interest expense, the first with the new markup. A figure below this quarter's would show the savings reaching profit.
New Export Plants Will Need More Tankers
Flex LNG's long-term case rests on new plants, mostly in the US, that chill natural gas into liquid for export. Chief executive Marius Foss wrote that "expanding LNG export capacity should increase LNG shipping demand".
- US exports, first ten months: up 20%, to about 105 million tonnes
- New US capacity ramping up next year: 56 million tonnes a year
- LNG Canada second phase, approved in September: 14 million tonnes a year
But the timing works against Flex LNG, because most of the new US plants start only in the second half of next year. The company said newly approved projects "support longer-term LNG supply growth" but will not ease supply soon.
What to watch: first cargoes from Golden Pass and Rio Grande, two of the new US plants. Early start-ups would give extra tankers work before Flex LNG's own ships come open.
🐻 Bear Case
Four Ships Could Lack Long Contracts Next Year
Flex LNG's contract backlog, the years of firm hire left on its ships, shows how much future income it has locked in. Chief executive Marius Foss said Flex Artemis and Flex Volunteer will trade short-term "until suitable long-term employment is secured".
No long deal came this quarter, so the backlog shrank by another three years. Flex Ranger, Flex Freedom and Flex Volunteer reach the end of firm hire early next year, and Flex Artemis has no contract at all.
- Firm backlog: 48 years, down from 51 last quarter and 53 a year ago
- Tankers on order worldwide: about 290, around 35% of the fleet
- Deliveries: about 25 more this year and 93 in 2027
- One-year charter rates: low $50,000s a day, from high $70,000s at the start of the quarter
This matters because Flex LNG will seek contracts while those new ships arrive. Charterers already pay less for one-year hire, and many now ask for rates tied to the spot market, the company said.
What to watch: whether Flex Freedom's charterer extends, and the rate on any long deal for Flex Artemis or Flex Volunteer. A rate near five-year market levels would ease this concern.
Dividend Still Needs Cash From Refinancing
Flex LNG pays the same dividend every quarter, about $41 million in total. Chief executive Marius Foss announced the "21st consecutive ordinary quarterly dividend of $0.75 per share".
Record sales did not bring record cash. Cash from operations fell to $41.8 million from $76.8 million last quarter, which Flex LNG linked to "the timing of advance charter hire receipts".
- Free cash flow (operating cash minus dry-dock spending): $40.8 million, against $40.6 million paid out
- Free cash flow, nine months: $113.6 million, against $121.7 million paid out
- Cash: $370.8 million, from $447.6 million in January
So the dividend still leans on refinancing cash, such as the roughly $34 million the Flex Enterprise deal should free.
What to watch: fourth-quarter operating cash, due in February. Cash below the payout would leave the dividend resting on refinancing again.
Risks this quarter didn't answer
Three standing risks drew little or no new evidence from this quarter's report and presentation, so each still waits for a specific number from Flex LNG.
- Debt and rate hedges: about $206 million falls due in early 2029. Swaps fix most interest costs only until mid-2027, so an extension would ease this risk.
- FuelEU surplus: Flex LNG has not reported a value for the credit its cleaner ships earned under EU shipping-fuel rules. A figure agreed with charterers would add income.
- Spot earnings of Flex Artemis and Flex Volunteer: still undisclosed. A figure would show how much of this year's gain came from the two ships.
💲 Other KPIs
Daily running costs per ship held almost level with last quarter but sit 3.7% above a year ago. Over nine months they averaged $16,161, above the $16,000 budget. Costs also ran above budget last year, so the overrun has lasted several quarters.
Debt minus cash, or net debt, held at $1,395 million, almost exactly where it stood a year ago. Scheduled repayments of about $28 million a quarter cut debt, while dividends drew cash down by a similar amount, so the gap barely moved.
Operating profit took 53.6% of sales, 4.6 points above a year ago. Last quarter's figure, 55.7%, stood higher still. Voyage costs, mainly fuel and repositioning, fell to 3.1% of sales from 4.3%. Running costs also took a smaller share of sales.
🔮 Guidance
Unchanged. The plan still has full-year sales of about $358 million at the middle of the range. By our math, that leaves about $82 million for the fourth quarter, about 4% below a year ago. Flex LNG raised the range by about 10% after the first quarter and has held it since.
Unchanged. The plan still has the fleet earning about $75,500 a day across the year. By our math, that implies about $71,000 in the fourth quarter, close to last year's level. Our math assumes every ship stays on hire, since Flex LNG finished its three planned dry-dock stays by June.
Unchanged. The plan still has Ebitda, earnings before interest, tax and depreciation excluding one-offs, near $268 million. By our math, that leaves about $63 million for the fourth quarter, roughly 2% above a year ago. Nine months already brought $204 million, so even the bottom of the range looks achievable.
❓ Key Questions
Will Flex Freedom's charterer extend its contract?
Flex Freedom's firm hire ends early next year, and the charterer holds an option to 2029. A declaration would cut the number of Flex LNG ships looking for work in a crowded market.
What did the two spot ships earn?
Flex LNG reports only a fleet average. The earnings of Flex Artemis and Flex Volunteer would show how much of this year's gain came from short-term trading.
How much of next year is already contracted?
Flex LNG gives contract cover only for the rest of this year. With four ships reaching the end of firm hire, next year's cover will decide how exposed sales are to lower rates.
When would the board change the dividend?
Free cash flow over nine months fell short of the payout, and refinancing filled the gap. Shareholders need to know what level of cash cover the board treats as safe.
What do this year's long contracts pay?
Flex Constellation's 15-year deal and Flex Aurora's two-year deal set the fleet's base income. Their rates would show whether the fixed contracts can keep the day rate near this year's level.