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Golar LNG (GLNG) Q2 Loss Wider on Shipping Market Weakness

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Golar LNG Limited GLNG posted lower-than-expected results in the second quarter of 2018. It incurred wider-than-expected loss (excluding 74 cents from non-recurring items) of 38 cents. The Zacks Consensus Estimate for the same stood at 19 cents. However, the amount of loss narrowed significantly from 51 cents a year ago.

Total operating revenues of $59.4 million also missed the Zacks Consensus Estimate of $63.2 million. However, the top line surged more than 100% year over year. Of the total revenues, Time and voyage charter revenues accounted for the bulk (51.9%), grossing $30.80 million (up 57.5% year over year). While Time charter revenues-collaborative arrangement were $4.87 million (up 10.6%), Vessel and other management fees were $5.13 million (up 15.3%). Meanwhile, Liquefaction services revenues were $18.58 million.

As was expected, seasonal softening of the shipping market caused a reduction of $16,400 in daily TCE (Time Charter Equivalent) earnings to $19,600 during the second quarter from $36,000 in the first. However, with improvement in the shipping market, third-quarter TCE is expected to at least double the second-quarter figure.

Total operating expenses soared 50.3% in the quarter under discussion to $78.73 million. Vessel operating expenses escalated 69.4% year over year to $20.5 million, primarily due to rise in FLNG operating costs with the onset of Hilli Episeyo's operation. Moreover, on commencement, Hilli Episeyo’s value depreciated and thus depreciation and amortization expenses climbed 17.8% year over year to $20.46 million.

Golar LNG Limited Price, Consensus and EPS Surprise

Golar LNG Limited Price, Consensus and EPS Surprise | Golar LNG Limited Quote

Liquidity

At the end of the second quarter, the company had cash and cash equivalents of $375.07 million compared with $214.86 million at December 2017 end. As of Jun 30, 2018, the company’s long-term debt totaled $1.85 billion compared with $1.02 billion as of Dec 31, 2017.

Dividend Hike

The company has raised its dividend payment for the second quarter to 12.5 cents per share (50 cents annually) from the previous 5 cents, courtesy of a sound financial position, lower capital expenses and the initiation of Hilli Episeyo contract.

Q3 Outlook

Third-quarter results are anticipated to get a boost from the operation of Hilli Episeyo and an improving shipping market.

Zacks Rank & Key Picks

Golar LNG has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are GATX Corporation GATX, Trinity Industries, Inc. TRN and SkyWest, Inc SKYW. While GATX carries a Zacks Rank #2 (Buy), Trinity and SkyWest sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Shares of GATX, Trinity and SkyWest have gained more than 41%, 26% and 95%, respectively, in a year.

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