Flex LNG Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; annual report filed March 17, 2022. This is not a standalone Q4 report, and the filing text does not provide clear standalone fourth-quarter financial results. Financial statements are prepared under U.S. GAAP and presented in U.S. dollars.
Business context and financial performance
Flex LNG owns and operates LNG carriers. Its fleet grew to 13 vessels by year-end, comprising modern MEGI and X-DF propulsion ships. The filing attributes higher 2021 revenue to fleet expansion, improved utilization and stronger achieved charter rates.
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Vessel operating revenue | $343.4 million | $164.5 million | Up $179.0 million, or about 109% |
| Operating income | $201.2 million | $75.6 million | Operating margin approximately 58.6%, versus 46.0% |
| Net income | $162.2 million | $8.1 million | Net margin approximately 47.2%, versus 4.9% |
| Basic and diluted EPS | $3.04 | $0.15 | — |
| Interest expense | $56.2 million | $41.8 million | Higher debt balances; partly offset by lower LIBOR and scheduled repayments |
| Gain/(loss) on derivatives | $18.4 million gain | $25.2 million loss | Favorable swap fair-value movement contributed to earnings |
| Operating cash flow | $214.8 million | $89.3 million | Increase of $125.5 million |
| Investing cash flow | $(265.9) million | $(691.4) million | Primarily vessel and equipment spending |
| Financing cash flow | $123.1 million | $603.3 million | Included debt proceeds, repayments and $98.9 million in dividends |
Margins above are calculated from the reported revenue and income figures. The filing reports no vessel impairment charge for 2021.
Balance sheet, debt and liquidity
- At December 31, 2021, cash, cash equivalents and restricted cash were $201.2 million, compared with $129.0 million a year earlier. Positive working capital was $93.3 million, up from $26.0 million.
- Total assets were $2.573 billion; total liabilities were $1.684 billion and shareholders’ equity was $889.4 million.
- Debt carrying value was $1.633 billion after debt issuance costs; gross contractual debt was $1.652 billion. The filing describes the former as net outstanding indebtedness, not net debt after cash.
- Management said operating cash flows, available borrowing capacity and cash were expected to meet existing liquidity requirements for at least 12 months from the report date. The company reported compliance with all financial covenants at year-end.
- Seventeen interest-rate swaps covered $677.8 million of amortized notional principal, at a weighted-average fixed rate of 1.17%.
Material changes, outlook and risks
- Fleet expansion and stronger market conditions drove the substantial revenue and operating cash-flow increases. Higher depreciation and vessel operating costs also reflected the larger fleet.
- At December 31, 2021, committed time-charter revenue was $806.9 million in total, including $264.9 million for 2022 and $234.3 million for 2023. Market-linked contracts are represented at their contractual floor rates; actual revenue may differ.
- As of March 15, 2022, management reported approximately 91% of available calendar days fixed under period charters for 2022 and 72% for 2023. One vessel was in the spot market at that date. These are post-year-end employment disclosures, not year-end figures.
- No formal earnings or rate guidance is provided. The filing discusses LNG demand and freight-rate volatility, spot-market exposure, seasonality, off-hire and operational risks, and competition. Four customers represented 66.1% of 2021 revenue.
- Management disclosed that COVID-related crew rotations caused operational disruption and added costs. Russia’s invasion of Ukraine had not affected the company’s charter contracts as of the report, but management cautioned that sanctions and wider economic effects could create future impacts.
- Two proposed 2022 refinancing transactions—a $375 million loan facility and $320 million in sale-and-leasebacks—had credit-approved term sheets but remained subject to final documentation and customary conditions. The filing also identifies LIBOR transition, interest rates, vessel values, debt covenants and evolving environmental rules as risks.
- Dividends paid in 2021 totaled $98.9 million, or $1.85 per share. A further $0.75-per-share dividend for Q4 2021 was declared in February 2022 and paid around March 16, 2022. Future dividends are discretionary and subject to legal and financing restrictions.
Important facts for investors to verify
- Review the audited financial statements and notes for debt terms, leaseback accounting, cash restrictions and the drivers of derivative gains.
- Confirm completion and final terms of the proposed 2022 refinancings, including their effect on maturities, interest costs and collateral.
- Assess charter coverage and renewal exposure alongside spot-market rates, customer concentration and charterer credit quality.
- Track covenant headroom, liquidity and vessel valuations, particularly if freight rates weaken or refinancing is delayed.
- Check the sustainability of dividends against operating cash flow, debt service, fleet investment and financing-agreement restrictions.