Golar LNG (GLNG) Q3 Loss Wider Than Expected, Revenues Miss

Golar LNG Limited GLNG incurred a loss (excluding 44 cents from non-recurring items) of 37 cents per share in third-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 25 cents. Moreover, the amount of loss increased year over year.

Total operating revenues amounted to $93.07 million, falling short of the Zacks Consensus Estimate of $101 million. The top line also declined year over year due to positioning and scheduled dry docking of three vessels during the quarter.

Of the total revenues, Liquefaction services revenues accounted for the bulk (55.3%) of the company’s top line. Revenues from this segment were flat on a sequential comparison. Time and voyage charter revenues rose 25.7% sequentially. Revenues from Vessel and other management fees too increased approximately 4% sequentially. Additionally, Time Charter Equivalent (TCE) earnings climbed to $35,200 per day in the quarter under discussion compared with $24,400 in second-quarter 2019. TCE earnings were partly affected by positioning and repositioning for 5 dry dockings.

The company reported operating loss of $13.67 million in the third quarter compared with $23.44 million in the previous reported quarter. Total operating expenses declined 20.3% sequentially in the quarter to $75.55 million. Vessel operating expenses decreased 7.9% to $28.4 million in the third quarter, mainly owing to reduced spare part purchases as well as lower repair and maintenance costs plus travel costs for FLNG Hilli Episeyo.

Liquidity

The company exited the third quarter with cash and cash equivalents of $250.15 million compared with $217.83 million at 2018 end. As of Sep 30, 2019, its long-term debt totaled $1.58 billion compared with $1.83 billion as of Dec 31, 2018.

Outlook

The company anticipates TCE earnings of $70,000-$75,000 per day in the fourth quarter. This anticipated improvement in charter rates is on the back of increasing LNG production, which has enabled the company to increase contract coverage. Golar LNG hopes for good coverage in the first quarter of 2020 as well. This, in turn, is likely to back robust improvements in EBITDA year-over-year cash generation from the shipping fleet. The company’s Sergipe project is on track to commence operations in the first quarter of 2020. However, it will not be able to complete the spin-off of its Trifuel Diesel Electric ("TFDE") LNG carrier by this year-end. Instead, it will close the same next year.

Zacks Rank & Key Picks

Golar LNG carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Frontline Ltd. FRO, Allegiant Travel Company ALGT and Alaska Air Group, Inc. ALK. While Frontline and Allegiant sport a Zacks Rank #1 (Strong Buy), Alaska Air Group carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Shares of Frontline, Allegiant and Alaska Air Group have rallied more than 100%, 69% and 14%, respectively, so far this year.

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