Q2 2026 Lumi Rental Co Earnings Call

August 5, 2026

Azfar Shakeel: Compared to Q2 2025. Our net revenue, which is including of leasing and rental, went down by 8%, heavily due to the reason of the rental business unit, specifically on the northern region side. In the EBITDA margin, we are down by 8 points as compared to Q2 2025. Whereas adjusted EBITDA margin also went down by 6.7 points as compared to Q2 2025. PBT ratio is better than the last quarters, if you see, even though we have the average age of those vehicles of 42 months. Our lease revenue per vehicle has went up as compared to Q2 2025 versus Q2 2026 by 9% plus. In terms of the operational performance of the company, total fleets went down by 1.8% as compared to last year, 30 June.

Speaker #1: Compared to Q2 of 2025. Our net revenue, which is including leasing and rental, went down by 8%, heavily due to the reason of the rental business unit.

Speaker #1: Specifically, on the northern region side, and the EBITDA margin we are down by 8 points as compared to the Q1—uh, Q2 of 2025. Whereas additional EBITDA margin also went down by 6.7 points as compared to Q1 of 2025.

Speaker #1: Q2 of 2025. PPE recovery ratio is better than the last quarter, if you see, even though we have the average age of those vehicles at 42 months.

Azfar Shakeel: PBT ratio is better than the last quarters, if you see, even though we have the average age of those vehicles of 42 months. Our lease revenue per vehicle has went up as compared to Q2 2025 versus Q2 2026 by 9% plus. In terms of the operational performance of the company, total fleets went down by 1.8% as compared to last year, 30 June.

Speaker #1: Our lease revenue per vehicle has went up as compared to Q2 of 2025 versus Q2 of 2026 by 9% plus. In terms of the operational performance of the company, total fleet was went down by 1.8% as compared to last year's 30th of June.

Speaker #1: We purchased approximately 1,429 vehicles in the last quarter, and 740 vehicles in the first quarter of this year, approximately 2,300 vehicles. We sold approximately 1,300 vehicles in Q1, and 700-plus vehicles in Q2 of this year.

Azfar Shakeel: We purchased approximately 1,429 vehicles in the last quarter and 740 vehicles in Q1 of this year, approximately 2,300 vehicles. We sold approximately 1,300 vehicles in Q1 and 700 plus vehicles in Q2 of this year. The fleet composition, 70% of the fleet is leasing and 30% is the rental. Next, please. Now we discuss about the short-term rental business. We have 47 branches across the KSA, 18 airport branches and 29 city branches. If you see the Q2 2025, the north region was 48% contributor of the revenue. Whereas in Q2 2026, it was 37.3%. As you know that in the north region, multiple projects are in the stage of preservation, which has resulted in declining of our revenue quarter-by-quarter basis. Next, please.

Speaker #1: The fleet composition: 70% of the fleet is leasing, and 30% is the rent. Next, please. Now we'll discuss about the short-term rental business. We have 47 branches across the KSE, 18 airport branches, and 20 city branches.

Azfar Shakeel: We have 47 branches across the KSA, 18 airport branches and 29 city branches. If you see the Q2 2025, the north region was 48% contributor of the revenue. Whereas in Q2 2026, it was 37.3%. As you know that in the north region, multiple projects are in the stage of preservation, which has resulted in declining of our revenue quarter-by-quarter basis. Next, please.

Speaker #1: If you see Q2 of 2025, the North region was a 48% contributor to the revenue. Whereas in Q2 of 2026, it was at 37.3%.

Speaker #1: As you read that in the north region, multiple projects are in the stage of reservation, which has resulted in declining of our revenue quarter by quarter basis.

Speaker #1: Next, please. In terms of the rental segment, fleet size, we are—we saw that 3% decline over the last quarter. Same period, last quarter. And the rental revenue was also down by 25% same quarter last year.

Azfar Shakeel: In terms of the rental segment fleet size, we saw that 3% decline over the last quarter, same period last quarter, and the rental revenue was also down by 25% same quarter last year. Majorly, this is attributed towards the preservation of the multiple projects inside the northern region. Our utilization went down from 76% to 60% for Q2. Average revenue per vehicles also decline in the rental segment. The government sector revenue basically was 58%, whereas corporate and government sector was 58%, and B2C was 42% in the quarter, in the Q2 of this year. Next, please. Now we discuss about the leasing segment. The leasing is more or less same level, so just less than 1% year-on-year basis. Lease revenue went up about 6% compared to SAR 164 million to SAR 175 million.

Speaker #1: Majorly attributed towards the preservation of the multiple projects inside the northern region. Our utilization went down from 76% to 60% in the further quarter 2.

Speaker #1: Average revenue per vehicle also declined in the rental segment. And the government sector revenue was basically—was 58%. Whereas individual was—corporate and government sector was 58%, and B2C was 42% in the market.

Azfar Shakeel: The government sector revenue basically was 58%, whereas corporate and government sector was 58%, and B2C was 42% in the quarter, in the Q2 of this year. Next, please. Now we discuss about the leasing segment. The leasing is more or less same level, so just less than 1% year-on-year basis. Lease revenue went up about 6% compared to SAR 164 million to SAR 175 million.

Speaker #1: In the Q2 of this year. Next, please. Now we'll discuss about the leasing segment. The leasing is more or less same level. It's just a less than 1% year-on-year basis.

Speaker #1: Lease revenue went up about 6%, compared to $164,275,000,000. Our average revenue per vehicle has also increased approximately 10%, from $27,700 per vehicle per annum to $30,259 per vehicle per annum.

Azfar Shakeel: Our average revenue per vehicle has also increased approximately 10% from SAR 27,700 per vehicle per annum to SAR 30,259 per vehicle per annum. We have seen that the corporate was 64%, whereas the government has increased from last quarter and the previous quarters from 30% to 36% now. In terms of the leasing business, we are resilient. We are having a growth, and this segment is performing well in terms of our top line as well as on the bottom line at a GP level. Next, please. In used car sales, we sold less cars as compared to our previous quarters. In the month of July and August, July, we sold approximately 800 plus vehicles, which was majorly from the rental business.

Speaker #1: We have seen that the corporate was 64%, whereas the government has increased from last quarter and the previous quarters from 30% to 36% now.

Speaker #1: So in terms of the leasing business, it—we are resilient. We are having a growth. And this segment is performing well in terms of our top line as well as on the bottom line.

Azfar Shakeel: We are having a growth, and this segment is performing well in terms of our top line as well as on the bottom line at a GP level. Next, please. In used car sales, we sold less cars as compared to our previous quarters. In the month of July and August, July, we sold approximately 800 plus vehicles, which was majorly from the rental business.

Speaker #1: At a GP level. Next, please. In used car sales, we sold less cars as compared to our previous quarters. But in the month of July and August—July we sold approximately 800-plus vehicles—which was from major—majorly from the rental business.

Speaker #1: And we are optimistic that we will be selling more cars in the month of August so that our utilization goes back to the normal of 20–25% on average.

Azfar Shakeel: We are optimistic that we will be selling more cars in the month of August so that our utilization goes back to the normal of 75% on average. In terms of the revenue, it increased as compared to the last quarter, 2.2%. Our revenue per vehicle is SAR 103,000 compared to purchase price of SAR 69,000 of the vehicle. Purchase price of SAR 103,000, whereas we sold at SAR 67,500 per vehicle. Purchase price recovery went up as compared to the last quarters from 65% to 67%. The average age also increased to 42 months. Next, please. I will ask my colleague, Mr. Sulaiman Alrasheed, he will give you an update regarding the financial performance of the company.

Speaker #1: In terms of revenue, it increased compared to the last quarter of 2021 by 2.2%. Our revenue per vehicle is $103,000, compared to a purchase price of $69,000 per vehicle.

Speaker #1: Purchase price of 103,000, whereas we sold at 69,500 per vehicle. Purchase price recovery went up as compared to the last quarter from 65 to 67%.

Azfar Shakeel: Purchase price of SAR 103,000, whereas we sold at SAR 67,500 per vehicle. Purchase price recovery went up as compared to the last quarters from 65% to 67%. The average age also increased to 42 months. Next, please. I will ask my colleague, Mr. Sulaiman Alrasheed, he will give you an update regarding the financial performance of the company.

Speaker #1: And the average age also increased to 42 months. Next, please. Now, I will ask my colleague, Mr. Suleiman Rashid, to give you an update regarding the financial performance of the company.

Speaker #2: Thank you. As per the— السلام عليكم. Good afternoon, everybody. And thank you today for being with us. So I'll start the sections with the—with what you call it, core financial performance, where we restructure our P&L in a different way.

Sulaiman Alrasheed: Thank you, Azfar. Good afternoon, everybody, and thank you today for being with us. I'll start the sections with what we call core financial performance, where we restructure our P&L in a different way. I will explain it line by line to understand the journey of the Q2 performance versus Q2 of last year. We start with the lease revenue. The quarter delivered a SAR 6.4 increase in revenue. On the rental revenue, there was a decline of about 26%, approximately SAR 35 million. This decline has a main driver. One is the north region reduction in business. This is mainly a B2B nature of business. Also, overall other regions, utilization has been dropped due to the geopolitical issues, as well as some disruptions on the airport operations, have impacted us heavily on Q2.

Speaker #2: I will explain it line by line to help you understand the journey of Q2 performance versus Q2 of last year. So, we’ll start with the lease revenue.

Speaker #2: The quarter delivered a 6.4 increase in revenue. On the rental revenue, there was a decline of about 26%, approximately 35 million. This decline has main driver.

Sulaiman Alrasheed: On the rental revenue, there was a decline of about 26%, approximately SAR 35 million. This decline has a main driver. One is the north region reduction in business. This is mainly a B2B nature of business. Also, overall other regions, utilization has been dropped due to the geopolitical issues, as well as some disruptions on the airport operations, have impacted us heavily on Q2.

Speaker #2: One is the north region reduction in business. This is mainly a B2B nature of business. Also, overall other regions utilization has been dropped due to the geopolitical issues as well as some disruptions on the airport operations have impacted us heavily on Q2.

Speaker #2: So the net revenue, lease, and rental year-on-year, quarter-on-quarter is a decline of 8%. Mainly the rental. And then total cost of ownership, which is represent the maintenance as well as the insurance, which is the direct cost of the vehicles.

Sulaiman Alrasheed: The net revenue, lease and rental year-on-year, quarter-on-quarter, is a decline of 8%, mainly the rental. Total cost of ownership, which represents the maintenance as well as the insurance, which is the direct cost of the vehicles. This cost remains stable quarter-on-quarter, with the contribution margins 87% versus 87.8% a year ago. The operating cost, which is the direct that's above cost of revenue, as well as the indirect operating expense. The direct expense increased from SAR 40.5 to SAR 49.2. The increase was due to the salaries as well as rent. On the indirect operating expenses, which is OpEx, increased by 31.7% from SAR 36.4 to SAR 47.9. Deducting both costs, giving us the operating profit, excluding the vehicle depreciation and gain on sale.

Speaker #2: These vehicles remain—this cost remain stable quarter-on-quarter. With the contribution margins of 87% versus 87.8 a year ago. Then the operating cost, which is the direct—that above cost of revenue—that above cost of revenue as well as the indirect operating expense.

Sulaiman Alrasheed: The operating cost, which is the direct that's above cost of revenue, as well as the indirect operating expense. The direct expense increased from SAR 40.5 to SAR 49.2. The increase was due to the salaries as well as rent. On the indirect operating expenses, which is OpEx, increased by 31.7% from SAR 36.4 to SAR 47.9. Deducting both costs, giving us the operating profit, excluding the vehicle depreciation and gain on sale.

Speaker #2: The direct expense increased from 40.5 to 49.2. The increase was due to the salaries as well as rent. On the—on the—on the indirect operating expenses, which is OPEX, increased by 31.7% from 36.4 to 47.9.

Speaker #2: Deducting both costs, giving us the operating profit excluding the vehicle, depreciation, and gain on sale. This we deliver $142 million versus $185.5 million a year ago.

Sulaiman Alrasheed: This will deliver SAR 142 million versus SAR 185.5 million a year ago, which gives us an operating profit margin of 51.7% versus 62% a year ago. The main cause of the drop in the operating is the loss of revenue on the rental. The rental infrastructure cost, some are fixed, some are variable costs. Variable costs, we're eliminating in a more faster way. However, there is a fixed cost, which is rentals, other infrastructure, that is taking some time to offload. The management aim is to offload excess costs on the rental sector to align with the operation and demand on the market for the next two quarters. We had a gain on sale of SAR 3.6 million, which gives us an EBIT excluding the provisions of SAR 44.6 million versus SAR 88.8 million.

Speaker #2: Which give us an operating profit margin of 51.7% versus 62% a year ago. Again, the main cause of the—of the—of the drop in the operating is the loss of revenue on—on—on—on the rental.

Speaker #2: The rental infrastructure cost is—is—is—is some other fixed, some are variable cost. Variable cost we're eliminating in a more faster way. However, there is a fixed cost, which is the rentals other infrastructure.

Sulaiman Alrasheed: However, there is a fixed cost, which is rentals, other infrastructure, that is taking some time to offload. The management aim is to offload excess costs on the rental sector to align with the operation and demand on the market for the next two quarters. We had a gain on sale of SAR 3.6 million, which gives us an EBIT excluding the provisions of SAR 44.6 million versus SAR 88.8 million.

Speaker #2: That is taking sometimes to offload. So the management aim is to offload access cost on the rental sector. To align with the operation and demand on the market for the next two quarters.

Speaker #2: Then we had a gain on sale of $3.6 million, which gives us an EBIT excluding the—excluding the provisions—of $44.6 million versus $88.8 million. Net income without the provisions was $19.3 million.

Sulaiman Alrasheed: Net income without the provisions was SAR 19.3 million, and we record the provisions of SAR 9.3 million on this quarter. This is a P&L of H1 versus H1 last year, as well as the quarter. I will be more talking about the performance of six months. Overall, revenue decreased 8%, and as well, this translated to a gross profit decrease of 16%. Operating profit decreased 39% from 176 to 102. The profit of the six-month period was SAR 50.9 million versus SAR 107 million a year ago. On the margin side, there was a decline due to the performance mainly driven to the rental on the EBITDA and the adjusted EBITDA margin, as well as in the EBITDA, and this is translated to the EBIT margin as well as net profit. The revenue movement.

Speaker #2: And we record the provisions of 9.3 on this quarter. Next. So this is a—a P&L of H1 versus H1 last year as well as quarter.

Speaker #2: I'll be talking more about the performance over the past six months. Overall, revenue decreased by 8%, which also translated to a gross profit decrease of 16%.

Speaker #2: Operating profit decreased 39% from 176 to 102. And the profit of the—of the six month period was 50.9 million versus 107 a year ago.

Sulaiman Alrasheed: Operating profit decreased 39% from 176 to 102. The profit of the six-month period was SAR 50.9 million versus SAR 107 million a year ago. On the margin side, there was a decline due to the performance mainly driven to the rental on the EBITDA and the adjusted EBITDA margin, as well as in the EBITDA, and this is translated to the EBIT margin as well as net profit. The revenue movement.

Speaker #2: On the margin side, there was a decline due to the performance mainly driven to the—to the rental. On the EBITDA and the adjusted EBITDA margin as well as an EBITDA—and this is translated to the EBIT margin as will net profit.

Speaker #2: The revenue movement — still, the lease delivered a growth of $10.5 million, and in rental, there was a decline of almost $35 million. Used car sales were made stable year on year.

Sulaiman Alrasheed: Still, the lease delivered a growth of SAR 10.5 million, and the rental, there was a decline of almost SAR 35 million. Used car sales were more stable from year-on-year. On the cost of revenue movement, year-on-year increase by 3.8%. The main increase was depreciation on the vehicles, salaries, and other benefits, and also repair and maintenance. On the G&A expenses, the increase was 31.6, which is the main item was SAR 3.7 million on the salaries, as well as on the supporting service, 2.4. Marginal increase on the software expenses as well as others. Now we will talk about the capital structure. Adjusted EBITDA declined from 311 million to 269 million. This is approximately 14% decrease. In the EBITDA, also the decrease was 21.4%, rising to 142 from 193.

Speaker #2: On the cost profile cost of revenue movement, year on year increased by 3.8%. The main increase was depreciation on the vehicles. Salaries and other benefits and also repair and maintenance.

Speaker #2: On the G&A expenses, the increase was $31.6 million, which is the main item, with $3.7 million on salaries as well as $2.4 million on supporting services.

Sulaiman Alrasheed: On the G&A expenses, the increase was 31.6, which is the main item was SAR 3.7 million on the salaries, as well as on the supporting service, 2.4. Marginal increase on the software expenses as well as others. Now we will talk about the capital structure. Adjusted EBITDA declined from 311 million to 269 million. This is approximately 14% decrease. In the EBITDA, also the decrease was 21.4%, rising to 142 from 193.

Speaker #2: Marginal increase on the—on the software expenses as well as others. Now we'll—we'll—we'll talk about the capital structure. Adjusted EBITDA declined from 311 million to 269 million.

Speaker #2: This is approximately a 14% decrease. The EBITDA also decreased by 21 to 21.5%, arriving at 142 from 193. On the right side of the slide, this all translates to a decrease in our retained ROIC, as well as retained equity, to 8.3 and 9.9.

Sulaiman Alrasheed: On the right side of the slide, this all translates to a decrease in our returns, ROIC, as well as retaining equity to 8.3 and 9.9. On the balance sheet, the total balance sheet of the assets decreased by 4.7%. This is mainly due to the decrease in the vehicles. We did not have much of vehicle additions, net additions this quarter. With the retaining of the profits of the six months, our net debt to equity improved from 1.33 to 1% approximately. The total debt decreased to SAR 1.5 billion, which is 16%, and the net debt almost, the percentage is the same level with SAR 1.5 billion as a debt level. On the debt coverage, we remain at our target in terms of debt to assets at 0.48, and also the net debt to the vehicles, we leverage the vehicles to 0.56.

Speaker #2: On the balance sheet, the total balance sheet of the assets decreased by 4.7%. This is mainly due to the decrease in the vehicles. We don't have much of vehicle additions net addition this quarter.

Speaker #2: With returning of the profits of the—of the six month, our net debt to equity improved from 1.33 to 1.1% approximately. Next. The total debt decreased to 1.5 million which is 16% and the net debt almost the percentage the same level with 1.4 with 1.5 as well billion as a debt level.

Sulaiman Alrasheed: With the retaining of the profits of the six months, our net debt to equity improved from 1.33 to 1% approximately. The total debt decreased to SAR 1.5 billion, which is 16%, and the net debt almost, the percentage is the same level with SAR 1.5 billion as a debt level. On the debt coverage, we remain at our target in terms of debt to assets at 0.48, and also the net debt to the vehicles, we leverage the vehicles to 0.56.

Speaker #2: And the debt coverage we remain at our target in terms of debt to assets at 0.848 and also the net debt to—to the vehicles we leverage the vehicle is 0.56.

Speaker #2: And the coverage ratio measures by the net debt over EBITDA and adjusted EBITDA. It remain stable within our targeted numbers. Now the key focus areas.

Sulaiman Alrasheed: On the coverage ratio measures by the net debt over EBITDA and adjusted EBITDA, it remains stable within our targeted numbers. Now, the key focus areas, I will hand it back to the CEO.

Speaker #2: I'll hand it back to the CEO.

Speaker #1: Thank you, Suleiman. As we have mentioned in our earlier presentations that our key focus areas are basically discipline capital allocation, specifically in terms of long life cycles of the commercial vehicles.

Azfar Shakeel: Thank you, Sulaiman. As we have mentioned in our earlier presentations, that our key focus areas are basically disciplined capital allocation, specifically in terms of long life cycles of the commercial vehicles. As you know that we have started this business in 2024 so that we can have longer period of vehicles so that we can capitalize accordingly. In the same way, we are also moving towards the mover vehicle business, leveraging extended life cycle utilizations. These are the ways to handle our disciplined capital allocation. On the other side, we are heavily focusing on cash generation and liquidity disciplines, as well as maintaining conservative leverage across cycles. We also started, a year ago, the logistics business where It's a low-cost asset, and it is kept based on the OpEx, and the margins are more or less same as compared to the CapEx model.

Speaker #1: As you know that we have started this business in longer period of vehicles so that we can capitalize accordingly. In the same way, we are also moving towards the mobile vehicles business leveraging extended life cycle utilizations.

Azfar Shakeel: In the same way, we are also moving towards the mover vehicle business, leveraging extended life cycle utilizations. These are the ways to handle our disciplined capital allocation. On the other side, we are heavily focusing on cash generation and liquidity disciplines, as well as maintaining conservative leverage across cycles.

Speaker #1: These are the ways to handle our discipline capital allocation. On the other side, we are heavily focusing on cash generation and liquidity disciplines as well as maintaining conservative leverage across cycles.

Speaker #1: We also started a year ago the logistic business where we have it's a low cost asset and it is based on the OPEX and the margins are more or less same as compared to the APEX model.

Azfar Shakeel: We also started, a year ago, the logistics business where It's a low-cost asset, and it is kept based on the OpEx, and the margins are more or less same as compared to the CapEx model.

Speaker #1: APEX model. In terms of the B2C rental business, we have we have seen that our B2C business is increasing. As compared to the B2B side, even though our rental went down in Q2 versus Q1 of this year, but we have seen that our B2C business is increasing on a quarterly basis by 18%.

Azfar Shakeel: In terms of the B2C rental business, we have seen that our B2C business is increasing as compared to the B2B side, even though our rental went down in Q2 versus Q1 of this year. We have seen that our B2C business is increasing on a quarterly basis by 18%. We are very optimistic that in the coming quarters, our rental revenue will increase on our B2C side due to the investment which we have made on our digital investment. These are the focus areas for us towards the business. Just to give you a summary that every other line of businesses, like leasing, used car sales, and budgeting business, all are in line with our numbered expectations. Yes, we have some challenge on the rental business, which was basically driven by the north region, where multiple projects got into the preservation stage.

Speaker #1: So we are very optimistic that in the coming quarters our rental revenue will increase on a B2C side due to the investment which we have made on our digital investment.

Speaker #1: So these are the focus areas for us towards the business. Just to give you a summary that our every other line of businesses like leasing, use car sales, logistic business, all are in line with our numbers expectations.

Azfar Shakeel: These are the focus areas for us towards the business. Just to give you a summary that every other line of businesses, like leasing, used car sales, and budgeting business, all are in line with our numbered expectations. Yes, we have some challenge on the rental business, which was basically driven by the north region, where multiple projects got into the preservation stage.

Speaker #1: Yes, we have some challenge on the rental business. Which was basically driven by the north region where multiple projects got into the preservation stage.

Speaker #1: Last year we did approximately 258 million reals of revenue from that segment. This year we'll be expecting that we'll do approximately between 130 to 140 that region.

Azfar Shakeel: Last year, we did approximately SAR 258 million of revenue from that segment. This year, we're expecting that we'll do approximately between SAR 130 to 140 million of that segment from that region. That loss of approximately SAR 100 million plus is due to the preservation of multiple projects on the north region. We are optimistic that we have made multiple steps to cover this cost, and we are optimistic that we will be able to cover in the next 12 to 18 months. In terms of the rental business, we are making a couple of steps. The first step is that we are heavily focusing on B2C business through our technology and the investment on digitalization. The second, we are focusing towards the staff transportation business. Third, that was one of the major region of the northern region, we are focusing now towards the other regions.

Speaker #1: That loss of approximately $100 million is due to the preservation of multiple projects in the north region. We are optimistic that we have made multiple steps to cover this cost.

Speaker #1: And we are optimistic that we will be able to cover this in the next 12 to 18 months. In terms of the rental business, we are taking a couple of steps.

Azfar Shakeel: In terms of the rental business, we are making a couple of steps. The first step is that we are heavily focusing on B2C business through our technology and the investment on digitalization. The second, we are focusing towards the staff transportation business. Third, that was one of the major region of the northern region, we are focusing now towards the other regions.

Speaker #1: The first step is that we are heavily focusing on B2C business through our technology. And the investment on digitalization. The second, we are focusing towards the staff transportation business.

Speaker #1: Third, which that was one of the major reason of the northern region, we are focusing now towards other regions. The third, we are focusing heavily towards the event management side.

Azfar Shakeel: The third, we are focusing heavily towards the event management side. These are the major three areas where we are focusing heavily to cover the gap of our B2C business loss in the northern region. Now, we are open for the question and answers.

Speaker #1: So these are the major three areas where we're focusing heavily to cover the gap of our B2C business loss in the northern region. Now we are open for the question and answers.

Speaker #3: Thank you, management, for your feedback. Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand or send your question through direct message to all panelists in the chat box.

[Company Representative] (Assembly Capital): Thank you, management, for your feedback. Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand or send your request through direct message to all panelists in the chat box. Our first question comes from the line of Taher. Taher, you are unmuted. Please go ahead.

Operator: Thank you, management, for your feedback. Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand or send your request through direct message to all panelists in the chat box. Our first question comes from the line of Taher. Taher, you are unmuted. Please go ahead.

Speaker #3: Our first question comes from the line of Tahir. Tahir, you're unmuted. Please go ahead.

Speaker #4: Yes. Hi. Good afternoon, gents. This is Tahir from JP Morgan. Thank you very much for the opportunity. Maybe two questions for the management. The first one is just really to focus on the northern region, NEOM, and you know the other projects.

[Analyst] (JP Morgan): Yes, sir. Hi, good afternoon, gents. This is Taher from JP Morgan. Thank you very much for the opportunity. Maybe two questions for the management. The first one is just really to focus on the northern region, NEOM and the other projects. Clearly, the government has taken a more conservative approach about scale back in spending, your utilization drop was quite significant. It's been on a downward trend, it's a key pressure point for the P&L in H1 and maybe Q2 specifically. I just want to understand where are we in terms of fleet size in the northern region. Any update on that? That's the first part of the question. The second one, how much more pain should we expect from that region over H2 of the year? If you can maybe just share some numbers in terms of revenue loss. What's the expectation?

Taher Safieddine: Yes, sir. Hi, good afternoon, gents. This is Taher from JP Morgan. Thank you very much for the opportunity. Maybe two questions for the management. The first one is just really to focus on the northern region, NEOM and the other projects. Clearly, the government has taken a more conservative approach about scale back in spending, your utilization drop was quite significant.

Speaker #4: I mean, clearly the government has taken a more conservative approach about scale back in spending and your utilization drop was quite significant. You know, it's been on a downward trend and it's a key pressure point for the PNL in the first half and maybe Q2 specifically.

Taher Safieddine: It's been on a downward trend, it's a key pressure point for the P&L in H1 and maybe Q2 specifically. I just want to understand where are we in terms of fleet size in the northern region. Any update on that? That's the first part of the question. The second one, how much more pain should we expect from that region over H2 of the year? If you can maybe just share some numbers in terms of revenue loss. What's the expectation?

Speaker #4: I just want to understand where are we in terms of fleet size in the northern region. Any update on that? That's the first question part of the question.

Speaker #4: The second one, how much more pain should we expect from that region over the second half of the year? If you can maybe just share some numbers in terms of, you know, revenues, loss, what's the expectation?

Speaker #4: So that would be maybe the first question. And then I'll come back to the second question.

[Analyst] (JP Morgan): That would be maybe the first question, and then I'll come back to the second question.

Taher Safieddine: That would be maybe the first question, and then I'll come back to the second question.

Speaker #2: Sure. So, in terms of the northern region, which heavily focuses on the NEOM side, at the start of Q3 last year, we had approximately 5,500 vehicles over there.

Azfar Shakeel: Sure. In terms of the northern regions, which heavily focus on the NEOM side. Start of Q3 of last year, we had approximately 5,500 vehicles over there. Today, we have approximately 2,000 vehicles in the region.

Speaker #2: Today we have approximately 200 vehicles in this region.

Speaker #4: Sorry, how much today?

[Analyst] (JP Morgan): Sorry, how much today?

Taher Safieddine: Sorry, how much today?

Speaker #2: So 2,000 plus.

Azfar Shakeel: SAR 2,000 plus.

Speaker #4: Okay.

[Analyst] (JP Morgan): Okay.

Taher Safieddine: Okay.

Speaker #2: Okay. Some of the vehicles we have sold in the Q1 and Q2 and some of the vehicles we have sold in the month of July.

Azfar Shakeel: Okay. Some of the vehicles we have sold in the Q1 and Q2, and some of the vehicles we have sold in the month of July. Which, I mean, majority of the vehicles were either the Hilux or the ESP which we used during the I'm hearing some background voices. Okay. Please. Thank you. In terms of our projections of the northern region side, as I mentioned to you, last year, we did SAR 258 million of revenue from the northern region. We are expecting that this year we'll close somewhere between SAR 130 to 140 million, then 2027, it can go further down. It is all about how much it will go down, depending upon the NEOM companies, that how long they will be there during 2027.

Speaker #2: I mean, majority of the vehicles were either the Hilux or the SUV which we were used during the opportunities. So that's a I'm hearing some voices background voices.

Speaker #2: Okay, please. Thank you. So in terms of our projections of the northern region side, as I mentioned to you, last year we did 258 million reals of revenue from the northern region.

Azfar Shakeel: In terms of our projections of the northern region side, as I mentioned to you, last year, we did SAR 258 million of revenue from the northern region. We are expecting that this year we'll close somewhere between SAR 130 to 140 million, then 2027, it can go further down. It is all about how much it will go down, depending upon the NEOM companies, that how long they will be there during 2027.

Speaker #2: We are expecting that this year we'll close somewhere between 130 to 140 million. And the 2027, it can go further down. Now, it is all about how much it will go down depending upon the NEOM company that how long they will be there during 2027.

Speaker #2: If we assume that there will be no other projects or the NEOM company is no more operational and there are no major events are there, then that region will have approximately between 50 to 70 million reals of revenue per annum.

Azfar Shakeel: If we assume that there will be no other projects or the NEOM company is no more operational and there are no major events are there, then that region will have approximately between SAR 50 to 70 million of revenue per annum. That is the northern region status as of last year, as of today, and some expected numbers for the next years. What is your second question? Taher?

Speaker #2: So that is the northern region status as of last year as of today. And some expected numbers for the next years. Now I can what is your second question?

Speaker #2: Tahir.

Speaker #3: Tahir, are you still with us? Okay. I think we lost Tahir. We'll go to the other question from the chat box. Our next question comes from Selma Afifi.

[Company Representative] (Assembly Capital): Taher, are you still with us? Okay, I think we lost Taher. We'll go to the other question from the chat box. Our next question comes from Salma Afifi. Steve, what caused the uptick in salary cost, and is this increase in salary one-time, or could we consider this as the new level?

Operator: Taher, are you still with us? Okay, I think we lost Taher. We'll go to the other question from the chat box. Our next question comes from Salma Afifi. Shakeel, what caused the uptick in salary cost, and is this increase in salary one-time, or could we consider this as the new level?

Speaker #3: Stays what caused the uptake in salary cost and is this increase in salary one time or could we consider this as the new level?

Speaker #2: In the GMA?

Azfar Shakeel: In the G&A?

Speaker #3: Yeah, salary cost.

[Company Representative] (Assembly Capital): Yeah, salary cost.

Operator: Yeah, salary cost.

Speaker #2: Okay. So in the salary cost, the increase is normal now. The reason is, last year, we had some expenses that were not there, like we did not have the head of the rental department.

Azfar Shakeel: Okay. In the salary cost, the increase is normal now. Reason being, last year we had some expenses was not there, like we do not have the head of the rental department. We do not have the cost of our digital team. Reason being, our system was in the process of building, and we call it as a CapEx. That is also came, if you see the slide number 15 in the presentation, that cost is SAR 2.4 million per quarter. SAR 800,000 is the monthly cost of our digital team. Whereas other costs went up a little bit on the rental side, indirect cost, and other places like the workshop staff also there in terms of this. In terms of the OpEx on a quarterly basis, we expect that it will be somewhere between SAR 46 to 47 million per quarter in the next two quarters.

Speaker #2: Then we have we do not have the cost of our digital team reason being our system was in the process of building and it was recorded as a CAPEX.

Speaker #2: And that is also came if you see the slide number 15 in the presentation that cost is 2.4 million per quarter. So 800,000 is a monthly cost of our digital team.

Azfar Shakeel: That is also came, if you see the slide number 15 in the presentation, that cost is SAR 2.4 million per quarter. SAR 800,000 is the monthly cost of our digital team. Whereas other costs went up a little bit on the rental side, indirect cost, and other places like the workshop staff also there in terms of this. In terms of the OpEx on a quarterly basis, we expect that it will be somewhere between SAR 46 to 47 million per quarter in the next two quarters.

Speaker #2: Whereas other costs went up a little bit on the rental side. In the cost and other places like a workshop staff also there in terms of this.

Speaker #2: In terms of the OPEX on a quarterly basis, we expect that it will be somewhere between 46 and 47 million reals per quarter in the next two quarters.

Speaker #3: Thank you, management. The next question in the chat box comes from Tritania. Stays. Was there any changes in the residual value estimates?

[Company Representative] (Assembly Capital): Thank you, management. The next question in the chat box comes from Katrina. It says, was there any changes in the residual value estimates?

Operator: Thank you, management. The next question in the chat box comes from [Katrina]. It says, was there any changes in the residual value estimates?

Speaker #2: No. So we do not expect any change in the residual value either positive or negative. Reason being now we are doing on a quarterly basis with the help of the auditors.

Azfar Shakeel: No. We do not expect any change in the residual value, either positive or negative. Reason being, now we are going on a quarterly basis with the help of the auditors. We don't see any major change in the values in the coming quarters.

Speaker #2: We don't see any major change in the values in the coming quarters.

Speaker #3: Okay. The next question in the chat box comes from Abdul Aziz Soyan. Stays how do you assess the current used car market in Saudi and what is your outlook for the used car prices moving forward?

[Company Representative] (Assembly Capital): Okay. The next question in the chat box comes from Abdul Al-Sulayan. Steve, how do you assess the current used car market in Saudi, and what is your outlook for the used car prices moving forward?

Operator: Okay. The next question in the chat box comes from Abdul Al-Sulayan. [Syed], how do you assess the current used car market in Saudi, and what is your outlook for the used car prices moving forward?

Speaker #2: It's a very good question. In terms of the market used car sales market, what we have seen today is that there is a little bit demand is increasing.

Azfar Shakeel: It's a very good question. In terms of the market, used cars sales market, what we have seen today is that there is a little bit demand is increasing. Reason being supply of new cars are start declining. The deliveries are happening, but it is delayed. For example, we have seen that we usually was receiving the vehicles within the time period of 15 days to 30 days from the dealers. Today, it has increased more than 30 days and sometimes more than 60 days due to the shipment of a specific vehicle or an adjournment. The supply of our new vehicles has impacted due to the geopolitical situation, Strait of Hormuz and other places.

Speaker #2: Reason being supply of new cars are start declining. The deliveries are happening, but it is delayed. For example, we have seen that we usually was receiving the vehicles within the time period of 15 days to 30 days from the dealers.

Speaker #2: But today it has increased more than 30 days and sometimes more than 60 days. Due to the shipment of a specific vehicle or in a journal.

Azfar Shakeel: Today, it has increased more than 30 days and sometimes more than 60 days due to the shipment of a specific vehicle or an adjournment. The supply of our new vehicles has impacted due to the geopolitical situation, Strait of Hormuz and other places.

Speaker #2: So the supply of a new vehicles has impacted due to the geopolitical situation, state of hormones and other places. Now in terms of the markets, this one usually as I explained in my Q1 during somebody asked me the same, that usually supply decrease quickly due to the situation, but acceptance of the increase in the secondary market takes time.

Azfar Shakeel: Now, in terms of the markets, this one usually I had explained in my Q1, wherein somebody asked me the same, that usually supply decrease quickly due to the situation, but acceptance of the increase in the secondary market takes time, which we have seen little bit size. You can see that from our PP recovery ratio, it was 67.4% based on 42 months. Theoretically, it is there, but how much will that impact? It's the time will decide. If the situation persists, as we have mentioned in our previous earning call also, then the market will have an impact. Quantum and non-linear.

Speaker #2: Which we have seen a little bit size, and you can see that from our PP recovery ratio, which was 67.4% based on 42 months. So theoretically it is there, but how much will get an impact?

Speaker #2: Time will decide. But if the situation persists, as we have mentioned in our previous earnings calls also, then the market will have an impact.

Speaker #2: Quantum unknown as of now.

Speaker #3: Thank you, management. The next question comes from the line of Abdul Aziz Sheikh. Abdul Aziz please introduce yourself, you're unmuted.

[Company Representative] (Assembly Capital): Thank you, management. The next question comes from the line of Abdulaziz Alsheikh. Abdulaziz, please introduce yourself. You're unmuted.

Operator: Thank you, management. The next question comes from the line of Abdulaziz Alsheikh. Abdulaziz, please introduce yourself. You're unmuted.

Speaker #4: Thank you, management, for the presentations. I have two questions from my end. The first question: I believe you mentioned both direct and indirect costs this quarter.

Abdulaziz Alsheikh: Thank you, management, for the presentations. I have two questions from my end. The first question, I believe you mentioned that both direct and indirect costs have increased during the quarter. Can you just help us understand what's the reason behind that increase and what part of that is sticky in nature? I mean, will continue with us in the upcoming period. My second question is on the rental car market. I understand the slowdown because of the war impact have affected the Q2 results. However, can you give us some guidance on what should we expect in the upcoming quarters? How is July looking so far? Is the volumes back on track? Just anything else to help us understand the situation in the market right now.

Speaker #4: Can you just help us understand what's the reason behind that increase, and what part of that is sticky in nature, or, I mean, would continue with us in the upcoming period?

Abdulaziz Alsheikh: I mean, will continue with us in the upcoming period. My second question is on the rental car market. I understand the slowdown because of the war impact have affected the Q2 results. However, can you give us some guidance on what should we expect in the upcoming quarters? How is July looking so far? Is the volumes back on track? Just anything else to help us understand the situation in the market right now.

Speaker #4: My second question is on the rental car market. I understand the slowdown because of the war impact have affected the second quarter results. However, can you give us some guidance on what should we expect in the upcoming quarters?

Speaker #4: How is July looking so far? Is the volumes back on track? Just anything that helps us to understand the situation in the market right now.

Speaker #2: Sure. So first of first question you asked regarding the direct operating costs and indirect operating costs increase. The indirect cost the direct cost increase due to the rent and the salaries of the staff.

Azfar Shakeel: Sure. First question you asked regarding the direct operating costs and indirect operating costs increase. The indirect cost, the direct cost increased due to the rent and the salaries of the staff. Reason being, last year, what the situation was that we were investing on the northern region and everything was going fine. We had invested employees. Their rent cost was very high at that time. Reason being in the NEOM, the rents are very high. We made contracts with the companies, and we deployed more resources. As you know that the decision of the NEOM side very much came on the Q4, end of Q4, and the government decided to preserve multiple projects over there.

Speaker #2: Reason being when we last year what we was the situation was that we were investing on the northern region and everything was going fine.

Speaker #2: So we had invested employees. Their rent cost was very high at that time. Reason being in the neom the rents are very high. So we made contracts with the companies and we deployed more resources.

Azfar Shakeel: Their rent cost was very high at that time. Reason being in the NEOM, the rents are very high. We made contracts with the companies, and we deployed more resources. As you know that the decision of the NEOM side very much came on the Q4, end of Q4, and the government decided to preserve multiple projects over there.

Speaker #2: As you know that the decision of the neom side was very much came on the Q4 end of Q4 and the government decided to preserve multiple projects over there.

Speaker #2: So the rental business which is basically you rent the vehicles for a few days they return the vehicles but the associated cost takes time to offload from the P&L.

Azfar Shakeel: The rental business, which is basically you rent the vehicles for a few days, they return the vehicles, but the associated cost takes time to offload from the P&L. Reason being there are contractual two things. We have hired people which have the contract to be with us. Otherwise, we will have other challenges. Rest assured that our direct operating expenses, which are related to the north region, will be offloaded by end of this year. In terms of the indirect expenses-

Speaker #2: Reasoning their contractual things. We have hired people which has a contract to be with us. Otherwise we will have other challenges. So rest assured that our direct operating expenses which is not very much related to the which are related to the north region will be offloaded by end of this year.

Speaker #2: Now in terms of the indirect expenses

Speaker #4: Sorry go ahead.

Abdulaziz Alsheikh: Sorry, go ahead.

Speaker #2: So in terms of the indirect expenses yes there are two type of expenses happened as we explained. That we were having a 2.4 million reals per quarter increase in the salary cost plus 3.7 million approximately so 6 million reals increase in salary cost due to the reason of our digital team we went live early this year and we are about now we are recording those.

Azfar Shakeel: In terms of the indirect expenses, yes, there are 2 type of expenses happened. As we explained that we were having a SAR 2.4 million per quarter increase in the salary cost, plus SAR 3.7 million approximately. SAR 6 million increase in salary cost due to the reason of our digital team we went live early this year, and now we are recording those expenses directly as P&L expenses. Plus some other expenses happened in terms of depreciation. Reason being when we were last year, we invested on the NEOM workshop as well as Tabuk workshop, and those costs has increased our depreciation expense during that year of this year. Your question was related to the rental segment normalization of the rental business unit.

Speaker #2: Slightly as a P&L expenses. So plus some other expenses happened in terms of depreciation. Reason being when we were in last year we invested on the neom workshop as well as the book workshop and those cost has increased our depreciation expense during the year of this year.

Azfar Shakeel: Plus some other expenses happened in terms of depreciation. Reason being when we were last year, we invested on the NEOM workshop as well as Tabuk workshop, and those costs has increased our depreciation expense during that year of this year. Your question was related to the rental segment normalization of the rental business unit.

Speaker #2: Now the your question was related to rental business unit as I explained to you that one of the biggest impact for our rental business is due to the neom region.

Azfar Shakeel: As I explained to you that one of the biggest impact for our rental business is due to the NEOM region, north region. Whereas we also got impacted in the Q2 from the south region. Reason being, we have seen that we have a couple of airports over there which was closed down for multiple times and sometimes for a week. Whereas in the Q1, it was impacted by the eastern region. That has an impact, but the major impact came from the northern region, which where we had the B2B business, whereas on the south region and the eastern region was back to normal in Q2, but it was impacted in Q1. The south region, which is basically Abha side, Al-Jouf. Sorry, Abha, Al-Baha and the Jizan. Those areas we had the impact in Q2.

Speaker #2: North region whereas we also got impacted in the Q2 from the south region. Reason being we have seen that there was some we have some couple of airports over there which was closed down for multiple times and sometimes for a week.

Speaker #2: Whereas in the Q1 it was impacted by the eastern region. So that has an impact but the major impact came from the northern region which where we had the B2B business whereas on the south region and the eastern region was back to the normal in Q2 but it was impacted Q1 whereas south region which is basically above side Al Jobe side sorry Abha Al Raj and so those areas we have the impact of the in Q2.

Azfar Shakeel: Whereas in the Q1, it was impacted by the eastern region. That has an impact, but the major impact came from the northern region, which where we had the B2B business, whereas on the south region and the eastern region was back to normal in Q2, but it was impacted in Q1. The south region, which is basically Abha side, Al-Jouf. Sorry, Abha, Al-Baha and the Jizan. Those areas we had the impact in Q2.

Speaker #2: The question is that what is the expected number of vehicles in the coming years or in the coming quarters? Our objective is we are objective is to stabilize the number of unutilized vehicles.

Azfar Shakeel: The question is that what is the expected number of vehicles in the coming years or in the coming quarters. Our objective is to stabilize the number of underutilized vehicles. That is the first objective. For that reason, we have sold 800 vehicles in the month of July, and we are planning to sell approximately same number in the month of August. Once we do that one, our utilization will go back to somewhere between 75% and above for month of September. If you talk about the Q2, it could be above 70%. Our objective is that whatever the cost we can take out from our top P&L, we are taking it out.

Speaker #2: That's the first objective. And for that reason we have sold 800 vehicles in the month of July and we are planning to sell approximately same number in the month of August.

Speaker #2: Once we do that, our utilization will go back to somewhere between 75% and above. For the month of September, if you talk about Q2, it could be above 70%.

Azfar Shakeel: Once we do that one, our utilization will go back to somewhere between 75% and above for month of September. If you talk about the Q2, it could be above 70%. Our objective is that whatever the cost we can take out from our top P&L, we are taking it out.

Speaker #2: Our objective is that whatever the cost we can take out from our P&L we are taking it out where you have seen that our as the CFO has explained to you Sulaiman that our TCO which is non-cash based TCOs are already in line with the last years.

Azfar Shakeel: We have seen that as the CFO has explained to you, Sulaiman, that our TCO, which is non-cash based TCOs are already in line with the last years, whereas, yes, we are depleting the vehicles in the month of July and August, as well as the payroll cost and the rent cost will be offloaded in Q3 and Q4.

Speaker #2: Whereas yes we are that splitting the deflitting the vehicles in the month of July and August. As well as the payroll cost and the rent cost will be offloaded in Q3 and Q4.

Speaker #4: That's clear. Thank you so much. Just a follow up on the cost question. We've noticed that the direct operating costs also increased on a sequential basis if I'm not mistaken.

Abdulaziz Alsheikh: That is clear. Thank you so much. Just a follow-up on the cost question. We have noticed that the direct operating costs also increased on a sequential basis, if I am not mistaken. Please correct me if I am wrong. My understanding is that the slowdown in the northern region has been there for a couple of quarters now. Is it fair to say that the company has been investing in other regions as well, but at the same time, they did not offload the cost from the northern region? Is that a fair understanding?

Speaker #4: Please correct me here if I'm wrong. And my understanding is that the slowdown in the northern region have been there for a couple of quarters now.

Abdulaziz Alsheikh: My understanding is that the slowdown in the northern region has been there for a couple of quarters now. Is it fair to say that the company has been investing in other regions as well, but at the same time, they did not offload the cost from the northern region? Is that a fair understanding?

Speaker #4: So is it fair to say that the company have been investing in other regions as well but in the same time they did not offload the cost from the northern region?

Speaker #4: Is that a fair understanding?

Speaker #2: Yes we are investing other regions also. Reason being we have seen that we are heavily investing towards the now towards the central region and the western region.

Azfar Shakeel: Yes, we are investing in other regions also. Reason being, we have seen that we are heavily investing towards the central region and the western region. Reason being, now those are very much futuristic for us. Reason being, Expo 2030 is about, is started, and we have seen multiple activities over there. We also have seen some improvement on the rental side from the X-Pro, which we have seen that there are some demands that are also coming for short term rental from the government sector side. We are also heavily investing towards the central region and the western region. As we are trying to utilize whatever the vehicles which we have today, reason being, we need to also see that the supply of the vehicles is also impacted.

Speaker #2: Reason being now those are very much futuristic for us. Reason being Expo 2030 is about is started and we have seen multiple activities over there.

Speaker #2: We have also seen some improvement on the rental side from the Expo, and we have observed that there is some demand coming in for short-term rentals from the government sector as well.

Azfar Shakeel: We also have seen some improvement on the rental side from the X-Pro, which we have seen that there are some demands that are also coming for short term rental from the government sector side. We are also heavily investing towards the central region and the western region. As we are trying to utilize whatever the vehicles which we have today, reason being, we need to also see that the supply of the vehicles is also impacted.

Speaker #2: So we are also heavily investing towards the central region and the western region. As we are trying to utilize whatever the vehicles which we have today reasoning we need to also see that the supply of the vehicles also impacted.

Speaker #2: So we are trying to balance off the supply versus ability of the vehicles. So that if we sell off all the vehicles but if the supply is supply is short then we will have more impact.

Azfar Shakeel: We are trying to balance off the supply versus availability of the vehicles. If we sell off all the vehicles, but if the supply is short, we will have more impact. Reason that we do not have the revenue, we do not have anything, nothing will go on. This is how we are trying to trade off between the supply versus the vehicles which we have today. We are trying to manage both the things together in the geopolitical situation versus supply.

Speaker #2: Then we do not have the revenue. We do not have anything then the thing will go on. So this is how we are trying to trade off between the supply versus the vehicle which we have today.

Speaker #2: So we are trying to manage both the things together in the situation of today's geopolitical situation versus supply.

Speaker #4: Clear. Thank you so much and I wish you the best of luck.

Abdulaziz Alsheikh: Clear. Thank you so much, I wish you the best of luck.

Speaker #2: Thank you.

Azfar Shakeel: Thank you.

Speaker #1: Thank you management. Our next question comes from the line of you're unmuted. Please go ahead.

[Company Representative] (Assembly Capital): Thank you, management. Our next question comes from the line of Fouad Khan. Fouad, you are unmuted. Please go ahead.

Operator: Thank you, management. Our next question comes from the line of [Jassim Al-Jubran]. [Jassim], you are unmuted. Please go ahead.

Speaker #4: Assalamualaikum.

Speaker #2: Waalaikumussalam.

Fouad Khan: As-salamu alaykum.

Jassim Al-Jubran: [As-salamu alaykum.]

Azfar Shakeel: Wa alaykumu s-salam.

Azfar Shakeel: [Wa alaykumu s-salam.]

Speaker #4: Thanks a lot for the opportunity to ask the question. I have three question. I start with the leasing side. You mentioned the three areas for grow your business and one of them is transportation business.

Fouad Khan: Thanks a lot for the opportunity to ask the question. I have three questions. I start with the leasing side. You mentioned the three areas for grow your business and one of them is transportation business. If you can please shed some light on what exactly you have in mind when you say you're going to grow in transportation business that's going to be leasing business, or what's the growth outlook and how much vehicle fleet that you can look to deploy there?

Jassim Al-Jubran: Thanks a lot for the opportunity to ask the question. I have three questions. I start with the leasing side. You mentioned the three areas for grow your business and one of them is transportation business. If you can please shed some light on what exactly you have in mind when you say you're going to grow in transportation business that's going to be leasing business, or what's the growth outlook and how much vehicle fleet that you can look to deploy there?

Speaker #4: If you can please share some light on what exactly you have in mind when you say you're going to grow in transportation business or there's going to be leasing business or what's the growth outlook and how much vehicle fleet that you can look to deploy there.

Speaker #2: Okay. So first of all and first I'll explain to you the leasing business. What we have seen recently that as we explained earlier that the government portal previously known as the SMR is no more available and now the new system is called the Expo is now actively we have seen very activeness in the Q2 of this year.

Azfar Shakeel: Okay. First of all, and first I'll explain to you the leasing business. What we have seen recently, that as we explained earlier that the government portal, previously known as the Masar, is no more available, and now the new system is called the X-Pro. We have seen very activeness in the Q2 of this year. From a government sector side, we are very much optimistic now that we have seen in the Q2 that approximately more than 800 vehicles came on the Masar for the bidding once again, which shows that, yes, the slowdown of the government sector in the Masar portal, which was last year or the previous years, was slower, we see that there is an increase in the requirements of the vehicles in the government sector.

Speaker #2: From a government sector side, we are very much optimistic now that we have seen in Q2 that approximately more than 800 vehicles came on the SMR for the bidding once again.

Azfar Shakeel: From a government sector side, we are very much optimistic now that we have seen in the Q2 that approximately more than 800 vehicles came on the Masar for the bidding once again, which shows that, yes, the slowdown of the government sector in the Masar portal, which was last year or the previous years, was slower, we see that there is an increase in the requirements of the vehicles in the government sector.

Speaker #2: Which shows that, yes, the slowdown of the government sector in the SMR portal which was last year, or the previous years, was slower, but we see that there's an increase in the requirements of vehicles in the government sector.

Speaker #2: In terms of what we can see also that our government sector revenue has increased 36% to 65 compared to 64% of corporate that also increased as compared to the previous quarters.

Azfar Shakeel: We can see also that our government sector revenue has increased 36% compared to 64% of corporate. That also increased as compared to previous quarters. We cannot give you as of now in the leasing segment as a number as of now. Reason being, there are multiple conditional things are associated. What is how the geopolitical situations unfold in the coming months, how the government reacts, will they transfer the funds from development to defense? All those things has a lot of questions in our minds for the coming months. That was the major reason that this earning release, we are not giving you any guidelines for midterm or long term or short term. Reason being, we are watching the market. We are evaluating the market, how it unfolds in the coming months.

Speaker #2: We cannot give you as of now in the leasing segment as a number as of now reason being we there are multiple conditional things are associated.

Speaker #2: What is how the geopolitical situations unfold in the coming months. How the government react. Will they transfer the funds from development to defense? All those things has a lot of questions in our minds for the coming months.

Azfar Shakeel: What is how the geopolitical situations unfold in the coming months, how the government reacts, will they transfer the funds from development to defense? All those things has a lot of questions in our minds for the coming months. That was the major reason that this earning release, we are not giving you any guidelines for midterm or long term or short term. Reason being, we are watching the market. We are evaluating the market, how it unfolds in the coming months.

Speaker #2: So it is really that was the major reason that this earning release we are not giving you any guidelines for midterm or a short long-term or short-term reason being we are watching the market.

Speaker #2: We are evaluating the market and how it unfolds in the coming months. The reason being, it's heavily dependent on multiple things, which I have explained to you earlier—geopolitical situation, government strategies—everything is depending on that one.

Azfar Shakeel: Reason being, it's heavily depending on multiple things, which I have explained to you earlier time, that geopolitical situation, government strategies, everything is depending on that one. It will define that how we define our midterm or long term strategy on the leasing segment or even the rental side. Yes, one thing we can assure you that as soon as we have clarity on the market, definitely we'll give you the guidelines. Did I answer your questions?

Speaker #2: It will define that how we define our midterm or a long-term strategy on the leasing segment or even the rental side. Yes one thing we can assure you that as soon as we have clarity on the market definitely we'll give you the guidelines.

Speaker #2: So, did I answer your questions?

Speaker #4: Yeah. Partially yes since you're looking for the clarity and to come from the government sector. On the other side in private side private sector are you looking increased demand in either tracking logistic or the areas or the sectors?

Fouad Khan: Yeah. partially, yes. Since you're looking for the clarity and to come from the government sector. On the other side, in private sector, are you looking increased demand in either trucking, logistic, or other areas or sectors?

Jassim Al-Jubran: Yeah. partially, yes. Since you're looking for the clarity and to come from the government sector. On the other side, in private sector, are you looking increased demand in either trucking, logistic, or other areas or sectors?

Speaker #2: Yes. In terms of the government sector it's a mid-government sector. For example what is happening today is if let me give you an example of some recommend which are big companies like STC or Aramco or Sakiko for example Aramco they are holding multiple bids as of now.

Azfar Shakeel: Yes. In terms of the government sector and semi-government sector, for example, what is happening today is Let me give you an example of semi-government, which are big companies like stc or Aramco or SABIC. For example, Aramco, they are holding multiple bids as of now. They were supposed to float in Q1 of last year or this year, but they are holding those bids or floating those requirements in the market. We have seen multiple places that people are holding their requirements due to one reason or another. We cannot comment on their reasoning, but for example, Aramco was supposed to launch a bid of 3,000 vehicles, which they hold it till now. They floated I don't know the reason why that. We cannot comment on the reasoning.

Speaker #2: They were supposed to float in the first quarter of last year or this year but they are holding those bids or the floating those requirements in the market.

Speaker #2: So there are we have seen multiple places that people are holding their requirements due to one reason or another. We cannot come in on their reasoning but for example Aramco was supposed to launch a bid of a 3,000 vehicles which they hold it.

Azfar Shakeel: We have seen multiple places that people are holding their requirements due to one reason or another. We cannot comment on their reasoning, but for example, Aramco was supposed to launch a bid of 3,000 vehicles, which they hold it till now. They floated I don't know the reason why that. We cannot comment on the reasoning.

Speaker #2: Till now. Then they floated due to I don't know the reason my friend. So we can't comment on the reasoning yes it's a little bit.

Fouad Khan: Is it due to some project?

Jassim Al-Jubran: Is it due to some project?

Speaker #4: Specific project that we should look forward to and that this is focused on the project so the bid should also move forward.

Azfar Shakeel: Yes.

Fouad Khan: Specific project that we should look forward to and that is focused on the project so that we should also move forward.

Jassim Al-Jubran: Specific project that we should look forward to and that is focused on the project so that we should also move forward.

Speaker #2: So for example this 3,000 vehicles are about is already due for the replacement. They are not releasing the RFQ. They showed the interest that they are looking for that one in the month of January we received the email that they are looking for 3,000 vehicles and the RFQ will be released in the first quarter first week of February.

Azfar Shakeel: For example, these three vehicles are already due for the replacement. They are not releasing the RFQ. They showed the interest that they are looking for that one. In the month of January, we received the email that they are looking for these other vehicles, and the RFQ will be released in the first week of February. Since then, it is on hold. There's a reason I don't know. These things are happening due to this, I believe. Again, either it is private sector or government sector. Everybody is impacted by the geopolitical situation. Everybody is looking that how the government strategies will unfold in the coming months. These are the things either B2B, B2C, G2B, whatsoever, everybody is in the situation of wait and watch. That's my understanding of the market as of now.

Speaker #2: Since then, it is on hold. There's a reason—I don't know. But these things are happening; it is due to this, I believe. Again, either it is private sector or government sector.

Azfar Shakeel: There's a reason I don't know. These things are happening due to this, I believe. Again, either it is private sector or government sector. Everybody is impacted by the geopolitical situation. Everybody is looking that how the government strategies will unfold in the coming months. These are the things either B2B, B2C, G2B, whatsoever, everybody is in the situation of wait and watch. That's my understanding of the market as of now.

Speaker #2: Everybody is impacted by the geopolitical situation. Everybody is depend looking that how the government strategies will unfold in the coming months. These are the things either B2B B2C D2B whatsoever everybody is in the way in the situation of wait and watch.

Speaker #2: That's my understanding of the market as of now.

Speaker #4: All right. All right. I jump to second area of second topic of my questioning is on the ECL. Since you're already taking 9 million ECL this quarter so I need to ask the question on the NEOM how much receivables you have from NEOM and what's the aging and expected ECL if you can give us some guidance on third and fourth quarter especially in the ECL charge.

Fouad Khan: All right. I jump to second topic of my questioning is on the ECL. Since you're already taking SAR 9 million ECL this quarter, I need to ask the question on the NEOM, how much receivables you have from NEOM, and what's the aging and expected ECL, if you can give us some guidance on Q3 and Q4, especially in the ECL charge.

Jassim Al-Jubran: All right. I jump to second topic of my questioning is on the ECL. Since you're already taking SAR 9 million ECL this quarter, I need to ask the question on the NEOM, how much receivables you have from NEOM, and what's the aging and expected ECL, if you can give us some guidance on Q3 and Q4, especially in the ECL charge.

Speaker #2: Yes. This is Suleiman. We cannot give you a specific number on how much receivable from each customer and the ECL this is a general basically we booked through the model this quarter on the third and and the fourth quarter yes we expect to to have additional provisions as this if the situation persists on the on the coming quarter yes we will continue booking provisions but again this is a more of a general provision in all receivables.

Sulaiman Alrasheed: Yes, Fa. This is Sulaiman. We cannot give you a specific number on how much receivable from each customer. The ECL, this is general, basically, we booked through the model on this quarter. On Q3 and Q4, yes, we expect to have additional provisions. If this situation persists on the coming quarters, yes, we will continue booking provisions. Again, this is a more of a general provision on receivables. You will see the receivables increase once we release the financial details. This is in response to that.

Sulaiman Alrasheed: Yes, [Jassim]. This is Sulaiman. We cannot give you a specific number on how much receivable from each customer. The ECL, this is general, basically, we booked through the model on this quarter. On Q3 and Q4, yes, we expect to have additional provisions.

Sulaiman Alrasheed: If this situation persists on the coming quarters, yes, we will continue booking provisions. Again, this is a more of a general provision on receivables. You will see the receivables increase once we release the financial details. This is in response to that.

Speaker #2: You've seen the receivables increase once we release the financial details, so this is in response to that.

Speaker #4: Is it possible to give us some colors on the aging of the receivables how much I mean already receivables there were let's say 180 plus days as of December and how much they are as of June?

Fouad Khan: Is it possible to give us some colors on the aging of the receivables? How much overdue receivables there were, let's say, 180-plus days as of December 2023, and how many there are as of June 2024?

Jassim Al-Jubran: Is it possible to give us some colors on the aging of the receivables? How much overdue receivables there were, let's say, 180-plus days as of December 2023, and how many there are as of June 2024?

Speaker #2: We don't have these details as of now. We cannot comment on it.

Sulaiman Alrasheed: We don't have these details as of now. We cannot comment on it.

Speaker #4: Okay. Okay. Last area of the questioning is on the initiative of the cost cutting that you have mentioned. Let's say how much cost saving we should expect when for the various measures that you have mentioned.

Fouad Khan: Okay. Last area of the questioning is on the initiative of the cost-cutting that you have mentioned. Let's say, how much cost saving we should expect for the various measures that you have mentioned, either the close one of the workshop or the lease rent or perhaps other direct costs cut down. Would you be able to put a number on it on a Q-on-Q basis that we should look forward to in terms of the cost-cutting measures?

Jassim Al-Jubran: Okay. Last area of the questioning is on the initiative of the cost-cutting that you have mentioned. Let's say, how much cost saving we should expect for the various measures that you have mentioned, either the close one of the workshop or the lease rent or perhaps other direct costs cut down. Would you be able to put a number on it on a Q-on-Q basis that we should look forward to in terms of the cost-cutting measures?

Speaker #4: Either the closing of the workshop or the event lease rent or some or perhaps other direct cost cut down. So if you would you be able to put a number on it on a quarter and quarter basis that we should look forward to in terms of the cost cutting measures?

Speaker #2: So, first of all, in terms of the cost cutting, it is not cost cutting. It is basically offloading the unproductive cost which is related to the reduction in the revenue in the regions.

Azfar Shakeel: First of all, in terms of the cost-cutting, it is not a cost-cutting. It is basically offloading the unproductive cost, which is related to the reduction in the revenue in the northern regions. The major cost which are expecting in Q3 and Q4 reduction is the salary cost and the rent cost of staff or the accommodation cost or the workshop cost. Quantum-wise, we cannot make any comment as of now, reason being, we are still in the process of letting people go. How much it will cost us, they are subject to multiple things. We will see better numbers on a quarter by quarter, is basically will be in Q3 and Q4 on the direct cost.

Sulaiman Alrasheed: First of all, in terms of the cost-cutting, it is not a cost-cutting. It is basically offloading the unproductive cost, which is related to the reduction in the revenue in the northern regions. The major cost which are expecting in Q3 and Q4 reduction is the salary cost and the rent cost of staff or the accommodation cost or the workshop cost.

Speaker #2: The major cost which are expecting in the Q3 and Q4 reduction is the salary cost and the rent cost of staff. Or the accommodation cost or the workshop cost.

Speaker #2: Quantum-wise, we cannot make any comment as of now. The reason being, we are still in the process of letting people go and determining how much it will cost us.

Sulaiman Alrasheed: Quantum-wise, we cannot make any comment as of now, reason being, we are still in the process of letting people go. How much it will cost us, they are subject to multiple things. We will see better numbers on a quarter by quarter, is basically will be in Q3 and Q4 on the direct cost.

Speaker #2: There are subject to multiple things. But we will see a pattern numbers on a quarter by quarter is basically it will be in the Q3 and Q4 on the direct cost.

Speaker #2: Opens I have mentioned to you in my previous questions to answer is that opex will remain more or less same between 47 46 and 47 in the coming quarters.

Azfar Shakeel: OpEx, as I mentioned to you in my previous question to answer, is that OpEx will remain more or less same between SAR 46 or SAR 47 in the coming quarters. The impact will be only in the short-term rental in the northern region only. Not that every other regions will be there.

Sulaiman Alrasheed: OpEx, as I mentioned to you in my previous question to answer, is that OpEx will remain more or less same between SAR 46 or SAR 47 in the coming quarters. The impact will be only in the short-term rental in the northern region only. Not that every other regions will be there.

Speaker #2: The impact will be only in the short term rental in the last region only not that everybody every other regions will be there.

Speaker #4: So let's put a number on the number of matches you had 44 branches as of last reported notice. So where should we see that number settling down let's say by end of December?

Fouad Khan: Just put a number on the number of branches. You had 44 branches as of last reported notice.

Jassim Al-Jubran: Just put a number on the number of branches. You had 44 branches as of last reported notice.

Azfar Shakeel: Yes.

Fouad Khan: Where should we see that number settling down, let's say, by end of December?

Jassim Al-Jubran: Where should we see that number settling down, let's say, by end of December?

Speaker #2: Over there again, if we still have mentioned to you that by the end of this year, we will be having a total revenue from the northern region between 130 to 140 million. But we are still having the branches—like, I'll drop, airport is there, we have Albat airport is still there, we have some branches over there. So, branches will remain the same. As I mentioned to you, the rent cost in the northern region, especially in NEOM, that will go down.

Azfar Shakeel: Over there, again, if we still have some vehicles out there, as I mentioned to you, that by end of this year, we will be having a total revenue from the northern region is between SAR 130 to 140 million. We are still having the branches, like Al-Jawf airport is there. We have Al Baha airport is still there. We have some branches over there. Branches will remain the same. As I mentioned to you, the rent cost in the northern region, especially the NEOM, that will go down. The salary which are associated to the different projects or different branches, that will go down. It is not as if it becomes zero. As I mentioned to you, let's assume that in 2027, the NEOM become preserved area and there's nothing on 1 January.

Azfar Shakeel: Branches will remain the same. As I mentioned to you, the rent cost in the northern region, especially the NEOM, that will go down. The salary which are associated to the different projects or different branches, that will go down. It is not as if it becomes zero. As I mentioned to you, let's assume that in 2027, the NEOM become preserved area and there's nothing on 1 January.

Speaker #2: Plus the salary which are associated to the different projects or different branches that will go down. So it is not that it will become zero.

Speaker #2: As I mentioned to you let's assume that in the 2027 there is the new become preserved area and there is nothing on the 1st of January then the total revenue will be 50 million to 70 million in between in 2027.

Azfar Shakeel: The total revenue will be SAR 50 to 70 million in between, in 2027. If everything goes to zero in the northern region, from a NEOM perspective.

Speaker #2: If everything goes to zero in the northern region from a new perspective.

Speaker #4: And when do you expect to yeah I have one last follow up question I think should go back to the line. Allow the other participant to ask a question.

Fouad Khan: When do you expect? I have one last follow-up question I think should go back to line, allow the other participants to ask the question.

Jassim Al-Jubran: When do you expect? I have one last follow-up question I think should go back to line, allow the other participants to ask the question.

Speaker #2: Okay. Do we have other questions?

Azfar Shakeel: Okay. Jude, do we have other questions?

Azfar Shakeel: Okay. [Jassim], do we have other questions?

Speaker #1: Yeah. Yeah. The next question comes from the line of you are unmuted please go ahead. Am I audible?

[Company Representative] (Assembly Capital): Yeah. The next question comes from the line of Dua Al Fadda. Dua, you are unmuted. Please go ahead.

Operator: Yeah. The next question comes from the line of Duaa AlFadda. Duaa, you are unmuted. Please go ahead.

Dua Al Fadda: Salam Alaikum. Am I audible?

Duaa AlFadda: Salam Alaikum. Am I audible?

Speaker #2: Yes. Yes.

Speaker #1: Yes you are.

Speaker #3: Hi. My question is on the northern region. Is there a plan to offset the last revenues from there? I mean any initiatives?

Azfar Shakeel: Yes.

Sulaiman Alrasheed: Yes, you are.

Operator: Yes, you are.

Dua Al Fadda: Hi. My question is on the northern region. Is there a plan to offset the lost revenues from there? Any initiatives?

Duaa AlFadda: Hi. My question is on the northern region. Is there a plan to offset the lost revenues from there? Any initiatives?

Speaker #2: Yes. So as I mentioned in my previous questions answers is that in the northern region last year the total revenue we generated was 258 million.

Azfar Shakeel: Yes. As I mentioned in my previous answers, is that in the northern region last year, the total revenue we generated was SAR 258 million. This year, we generated around SAR 30 to 140 million. That delta of approximately SAR 100 to 120 million, we are trying to offset by four major activities which we started, focusing heavily towards that. One is staff transportation. Reason being, over in the northern region, we were transferring approximately 7,000 employees on a daily basis, 220 plus buses. Now that contract is no more there, we are trying to use those resources and infrastructure in other regions. As of now, we are optimistic that we will be able to recover that things in the coming months. Staff transportation is one thing. Second, we were focusing on the event side. As you know, there are more than 100 events happens during a year.

Sulaiman Alrasheed: Yes. As I mentioned in my previous answers, is that in the northern region last year, the total revenue we generated was SAR 258 million. This year, we generated around SAR 30 to 140 million. That delta of approximately SAR 100 to 120 million, we are trying to offset by four major activities which we started, focusing heavily towards that.

Speaker #2: This year we generate 130 to 140 million. That delta of approximately 100 to 120 million we are trying to offset by four major activities which we started.

Speaker #2: Focusing heavily towards that. One is staff transportation reason being over in the northern region we were transferring approximately 7,000 passenger of employees on a daily basis to 120 plus buses.

Sulaiman Alrasheed: One is staff transportation. Reason being, over in the northern region, we were transferring approximately 7,000 employees on a daily basis, 220 plus buses. Now that contract is no more there, we are trying to use those resources and infrastructure in other regions.

Speaker #2: Now that contract is no more there we are trying to use those resources and the infrastructure in other regions. And we as of now we are optimistic that we will be able to recover that things in the coming months.

Sulaiman Alrasheed: As of now, we are optimistic that we will be able to recover that things in the coming months. Staff transportation is one thing. Second, we were focusing on the event side. As you know, there are more than 100 events happens during a year.

Speaker #2: So this is the staff transportation is one thing. Second we were focusing on the event side as you know that there are more than 100 events happens during the year due to the first in the Q1 and Q2 multiple situation of this one multiple projects didn't happen like a Formula 1 which we secured the contract but unfortunately we were not able to execute reason being the event was cancelled.

Azfar Shakeel: Due to the first in the Q1 and Q2, multiple situation of this one, multiple projects didn't happen, like Formula 1, which we secured the contract, but unfortunately, we were not able to execute, reason being, the event was canceled. We are optimistic that in Q3 and Q4, the event will be there, and we'll be recovering or we will be capturing those contracts to provide event transportation during the Q3 and Q4. The third business which we are heavily focusing, as we have mentioned to you, we've invested on the retail for our B2C business, which we have seen in the Q1 that our rental revenue, the B2C online business increased by 18%, which also tells us that we will be able to recover some portion of the lost revenue in the north region through B2C online business.

Speaker #2: But we are optimistic that in Q3 and Q4 the events will be there and we will be recovering or we will be capturing those contracts to provide staff transportation sorry event transportation during the Q3 and Q4.

Speaker #2: The third business, which we are heavily focusing on, as we have mentioned to you, we've invested a little for a B2C business, which we have seen in the Q2.

Azfar Shakeel: The third business which we are heavily focusing, as we have mentioned to you, we've invested on the retail for our B2C business, which we have seen in the Q1 that our rental revenue, the B2C online business increased by 18%, which also tells us that we will be able to recover some portion of the lost revenue in the north region through B2C online business.

Speaker #2: Q1 that our rental revenue from the B2C online business increased by 18%, which also tells us that we will be able to recover some portion of the lost revenue in the North region through B2C online business.

Speaker #2: So these are the major areas where we are heavily focusing towards the business to recover our revenues there.

Azfar Shakeel: These are the major areas where we are heavily focusing towards the business to recover our revenues there.

Sulaiman Alrasheed: These are the major areas where we are heavily focusing towards the business to recover our revenues there.

Speaker #3: Okay clear. And if I may ask about NIPCO contract. What's the update over there?

Dua Al Fadda: Okay, clear. If I may ask about NIPCO contract, what's the update over there?

Duaa AlFadda: Okay, clear. If I may ask about NIPCO contract, what's the update over there?

Speaker #2: So in terms of the NIPCO, let me say that as of the most full project we secured last year, out of those 13 major projects, five are already revenue generating.

Azfar Shakeel: In terms of the NIPCO, let me say that, as of the modular project which we secured last year, out of those 13 major projects, five are already delivered, and we are generating the revenue. Two module projects are in process, which will be operational most likely by Q3 end. The remaining six other module projects will be handed over to us in the Q1 and Q2 of next year. By 30 June, all the 13 module projects will be handed over to us, and we will be operating from there. The total revenue from those projects is approximately, you can say that per annum is SAR 100 million.

Sulaiman Alrasheed: In terms of the NIPCO, let me say that, as of the modular project which we secured last year, out of those 13 major projects, five are already delivered, and we are generating the revenue. Two module projects are in process, which will be operational most likely by Q3 end.

Speaker #2: Two projects most full projects are in process which will be operational most likely by Q3 end. And remaining six other module projects will be will be handed over to us in the Q1 and Q2 of next year.

Sulaiman Alrasheed: The remaining six other module projects will be handed over to us in the Q1 and Q2 of next year. By 30 June, all the 13 module projects will be handed over to us, and we will be operating from there. The total revenue from those projects is approximately, you can say that per annum is SAR 100 million.

Speaker #2: So by 30th June all the 13 module projects will be handed over to us and we will be operating from there. The total revenue from those projects is approximately you can say that per annum is 100 million yards.

Speaker #3: Sorry how much? 100 million?

Speaker #2: 100 million yards which is per annum 808 million yards approximately 8 million plus on a monthly basis from June on.

Dua Al Fadda: Sorry, how much? SAR 100 million?

Duaa AlFadda: Sorry, how much? SAR 100 million?

Azfar Shakeel: SAR 100 million, which is per annum. SAR 8 million, approximately SAR 8 million plus on a monthly basis from June on.

Sulaiman Alrasheed: SAR 100 million, which is per annum. SAR 8 million, approximately SAR 8 million plus on a monthly basis from June on.

Speaker #3: This is for 2027 onwards right?

Dua Al Fadda: This is for 2027 onwards, right?

Duaa AlFadda: This is for 2027 onwards, right?

Speaker #2: Yes. So I can say that from this module project 8 million yards a month from June on.

Azfar Shakeel: Yes. I can say that from this modular project, SAR 8 million a month from June onwards.

Sulaiman Alrasheed: Yes. I can say that from this modular project, SAR 8 million a month from June onwards.

Speaker #3: June this year?

Speaker #2: June next year.

Dua Al Fadda: June this year?

Duaa AlFadda: June this year?

Azfar Shakeel: June next year.

Sulaiman Alrasheed: June next year.

Speaker #3: Yeah. So, for this year, how much would it be?

Dua Al Fadda: Yeah, for this year, how much would it be?

Duaa AlFadda: Yeah, for this year, how much would it be?

Speaker #2: So now this is the first one project okay then we have another project with them is called the LC or logistic centers main logic centers.

Azfar Shakeel: Now this is the first one project. Okay. We have another project with them is called the LC or logistic centers, main logistic centers, which we are operating in Al Jouf, and that is which is already operational. That will be generating approximately somewhere between SAR 30 million per annum. You can say that we will be having approximately SAR 10 million of revenue per month from June onwards, June 2027 onwards. This year, we close between SAR 60 to 70 million. Next year, it will be more than SAR 100 million.

Sulaiman Alrasheed: Now this is the first one project. Okay. We have another project with them is called the LC or logistic centers, main logistic centers, which we are operating in Al Jouf, and that is which is already operational. That will be generating approximately somewhere between SAR 30 million per annum. You can say that we will be having approximately SAR 10 million of revenue per month from June onwards, June 2027 onwards. This year, we close between SAR 60 to 70 million. Next year, it will be more than SAR 100 million.

Speaker #2: Which we are operating in Al Jove and that is which is already operational and that is we're generating approximately somewhere between 30 million yards per annum.

Speaker #2: So you can say that we will be having approximately 10 million yards of revenue per month from June onward June 2027. This year we close between 60 to 70 million.

Speaker #2: Next year it will be more than 100 million.

Speaker #3: Okay 60 to 70 million this year and then above 100 next year.

Dua Al Fadda: Okay. SAR 60 to 70 million this year, above SAR 100 million next year.

Duaa AlFadda: Okay. SAR 60 to 70 million this year, above SAR 100 million next year.

Speaker #2: Next year. On the logistic business.

Azfar Shakeel: Next year. On the logistic business.

Speaker #3: Okay. Clear. And then just one last question if I may. The margins are they close to Neom's margins? I'm just trying to not calculate just to understand the impact of NIPCO's contribution versus Neom.

Dua Al Fadda: Okay. Clear. Just one last question, if I may. The margins, are they close to NEOM's margins? I'm just trying to, not calculate, just to understand the impact of NIPCO's contribution versus NEOM.

Duaa AlFadda: Okay. Clear. Just one last question, if I may. The margins, are they close to NEOM's margins? I'm just trying to, not calculate, just to understand the impact of NIPCO's contribution versus NEOM.

Speaker #2: So good thing is that our NIPCO project or the logistic business is having a good EBIT margin which is approximately 25% and above. On an average.

Azfar Shakeel: Good thing is that our NIPCO project or the logistics business is having a good EBIT margin, which is approximately 25% and above on an average. It doesn't have any financial cost. Reason being, 95% of the expenses are OpEx major. There's no interest cost associated to this project. Whatever the EBIT margin, it is the net profit margin.

Speaker #2: And it doesn't have any financial cost reason being it is 95% of the expenses are OPEX major. So there's no interest cost associated to this project.

Speaker #2: So whatever the EBIT margin it is the NIPCO margin down the line.

Speaker #3: Okay and that's booked in the short term or long term pieces?

Dua Al Fadda: Okay, that's booked in the short term or long term?

Duaa AlFadda: Okay, that's booked in the short term or long term?

Speaker #2: Long term. Long term contracts.

Speaker #3: Okay okay. Thank you so much.

Azfar Shakeel: Long-term projects.

Dua Al Fadda: Okay.

Duaa AlFadda: Okay.

Azfar Shakeel: Two-

Dua Al Fadda: Thank you so much.

Duaa AlFadda: Thank you so much.

Azfar Shakeel: Yeah

Speaker #1: Thank you Manjman. The next question in the chat box comes from Selma Afifi. It says other than the Jubilatical situation and the effect of the northern region are there any other factors impacting short term utilization?

[Company Representative] (Assembly Capital): Thank you, management. The next question in the chat box comes from Salma Afifi. It says, Other than the geopolitical situation and the effect of the northern region, are there any other factors impacting short-term utilization?

Operator: Thank you, management. The next question in the chat box comes from Salma Afifi. It says, Other than the geopolitical situation and the effect of the northern region, are there any other factors impacting short-term utilization?

Speaker #2: No. So if we say in the rental business have impacted heavily due to the B2B business in the northern region and partially little bit impacted in the eastern region Q1 and south region in the Q2.

Azfar Shakeel: No. As we've seen in the rental business, have impacted heavily due to the B2B business in the northern region and partially, little bit impacted in the eastern region in Q1 and south region in the Q2. Quantum of those impacts is not very much, which can say that yes, it is impacting the margins. The biggest margin impact is from the north.

Speaker #2: But on top of those impacts it's not very much which can say that yes it is impacting the margins. The biggest margin impact is from the north.

Speaker #1: Clear. Our next question comes from the line of Abdillah. Abdillah you're unmuted. Please introduce yourself.

[Company Representative] (Assembly Capital): Clear. Our next question comes from the line of Abdullah. Abdullah, you are unmuted. Please introduce yourself.

Operator: Clear. Our next question comes from the line of Abdulaziz. Abdulaziz, you are unmuted. Please introduce yourself.

Speaker #4: Hello. Thank you for presentation. I have one question.

[Analyst] (SNB Capital): Hello. Thank you for the presentation. I have one question.

Abdulaziz Alsheikh: Hello. Thank you for the presentation. I have one question.

Speaker #2: Please.

Speaker #4: On utilization, does your fleet base include vehicles held for sale and inventory, and vehicles sitting in the workshop, or are those carved out?

Azfar Shakeel: Please.

[Analyst] (SNB Capital): On utilization, does your fleet base include vehicles held for sale in inventory and vehicles sitting in the workshop, or are those kept out?

Abdulaziz Alsheikh: On utilization, does your fleet base include vehicles held for sale in inventory and vehicles sitting in the workshop, or are those kept out?

Speaker #2: We have vehicles either operational or held in sales can you show me the Google benefits? Google benefit. No no benefit here.

Azfar Shakeel: We have vehicles either operational or held in sales. Can you please go to the balance sheet, please? Go to the balance sheet. On the balance sheet. Yes.

Speaker #4: Okay thank you.

[Analyst] (SNB Capital): Okay. Thank you.

Abdulaziz Alsheikh: Okay. Thank you.

Speaker #2: No basically how much is the how much is the benefit and hold on hold? Available for sale. Abdillah if I understand you're saying that the utilization doesn't include the vehicles for sale.

Azfar Shakeel: Now, basically, how much is on hold or available for sale? Abdullah, if I understand you're saying the utilization, does it include the vehicles for sale? This is the question?

Azfar Shakeel: Now, basically, how much is on hold or available for sale? Abdulaziz, if I understand you're saying the utilization, does it include the vehicles for sale? This is the question?

Speaker #2: This is the question.

Speaker #4: Yeah yeah. That's the include only the carved out or they included the inventory held for sale and vehicles from inventory held of sale and workshop.

[Analyst] (SNB Capital): Yeah. They included only the kept out or they included the inventory held for sale and vehicles from inventory held for sale and workshop.

Abdulaziz Alsheikh: Yeah. They included only the kept out or they included the inventory held for sale and vehicles from inventory held for sale and workshop.

Speaker #2: No the.

Speaker #4: And when you're calculating the utilization rate, are you including the vehicles that are held for sale, or are you excluding them?

Azfar Shakeel: No.

[Analyst] (SNB Capital): You're calculating the utilization rate.

Abdulaziz Alsheikh: You're calculating the utilization rate.

Azfar Shakeel: Okay

[Analyst] (SNB Capital): Do you exclude the vehicles that's held for sale or you include it?

Abdulaziz Alsheikh: Do you exclude the vehicles that's held for sale or you include it?

Speaker #2: Yes. No no we exclude it. This is excluded.

Azfar Shakeel: Yes. No, we exclude it. This is excluded.

Speaker #4: Okay, okay. Thank you. Thank you.

[Analyst] (SNB Capital): Okay. Thank you.

Abdulaziz Alsheikh: Okay. Thank you.

Speaker #1: Thank you Manjman. Our next questions comes from the line of Taher. Taher you're unmuted. Please go ahead.

[Company Representative] (Assembly Capital): Thank you, management. Our next question comes from the line of Taher. Taher, you're unmuted. Please go ahead.

Abdulaziz Alsheikh: Thank you, management. Our next question comes from the line of Taher. Taher, you're unmuted. Please go ahead.

Speaker #5: Yes thank you. Sorry. Just maybe a one follow up. On the short term rental I mean clearly you know geopolitics and the uncertainty is is there.

[Analyst] (JP Morgan): Yes. Thank you. Sorry, just maybe one follow-up. On the short-term rental, clearly, geopolitics and the uncertainty is there. I just want to understand on the utilization, how should we think about utilization trends going into H2? Is the worst behind us? Should we think about utilization improving? Maybe if we talk include or exclude northern region. I know northern region has its own specific issues, but in general, like airport activity and so on, are you seeing a pickup in activity in July onwards versus the levels of the conflict from March till June? If I'm making myself clear.

Taher Safieddine: Yes. Thank you. Sorry, just maybe one follow-up. On the short-term rental, clearly, geopolitics and the uncertainty is there. I just want to understand on the utilization, how should we think about utilization trends going into H2? Is the worst behind us?

Speaker #5: But I just want to understand on the utilization how should we think about utilization trends going into the second half of the year? Is the worst behind us should we think about utilization improvement improving maybe if we talk include or exclude northern region.

Taher Safieddine: Should we think about utilization improving? Maybe if we talk include or exclude northern region. I know northern region has its own specific issues, but in general, like airport activity and so on, are you seeing a pickup in activity in July onwards versus the levels of the conflict from March till June? If I'm making myself clear.

Speaker #5: I know northern region has its own specific issues but in general like airport activity and so on. Are you seeing a pick up in activity in July onwards versus the levels of you know the conflict from March till June?

Speaker #5: If I'm making myself clear.

Speaker #2: Sure. Let me answer your question in three segments. The first segment is that if we exclude the northern region from our rental business we are our other regions are more or less same Taher please mute yourself.

Azfar Shakeel: Sure. Let me answer your question in three segments. The first segment is that if we exclude the northern region from our rental business, our other regions are more or less same as compared to last year. Taher, please mute yourself. Thank you. What I was saying is that if we exclude the northern region from the rental business from a revenue perspective, just for the understanding, our revenues in the other regions are more or less same or little bit upper as compared to last year. The second thing is that utilization was impacted. We are about to sell, and also we are making sure that what type of vehicle we need to sell and when to sell. Reason being, the supply of the vehicles has also started, making a little bit pain in the operations.

Speaker #2: Thank you. So what what I was saying is that if we exclude the northern region from the rental business from a revenue perspective just for the understanding our revenues in the other regions are more or less same or a little bit upper as compared to the last year.

Azfar Shakeel: What I was saying is that if we exclude the northern region from the rental business from a revenue perspective, just for the understanding, our revenues in the other regions are more or less same or little bit upper as compared to last year.

Speaker #2: Now the second thing is that utilization is impact is was impacted we are about to sell as also we are making sure that what type of vehicle we need to sell and when to sell.

Azfar Shakeel: The second thing is that utilization was impacted. We are about to sell, and also we are making sure that what type of vehicle we need to sell and when to sell. Reason being, the supply of the vehicles has also started, making a little bit pain in the operations.

Speaker #2: Reason being the supply of the vehicles has also started making us a little bit pain in the operations. Reason being due to the supply of vehicles are got delayed we need to make sure that if we need a vehicle later on we should have the vehicle so that we can recover the our fixed cost or the limited cost.

Azfar Shakeel: Reason being, due to the supply of vehicles are delayed, we need to make sure that if we need a vehicle later on, we should have the vehicle so that we can recover our fixed cost or the lifted cost. In terms of the pain is gone. As I mentioned to you, that the revenue was rent out very quickly in Q1 and Q2, and will also go out in Q3 and Q4. We are trying to stabilize the cost in relation to the revenue, and as we've mentioned, that we will further decrease the cost of the northern region in Q3 and Q4. If you ask me that what will be the best quarters in terms of the top line and bottom line, will be the Q1 of 2027. Reason being, in that quarter, the pain of all the things will be wiped out from the P&L.

Speaker #2: Now in terms of the the pain is gone we as I mentioned to you that the revenue was rent out very quickly in Q1 and Q2 as well also go out in Q3 and Q4.

Speaker #2: We are trying to stabilize the cost and related to the revenue and as we've mentioned that we will further decrease the cost of the northern region in Q3 and Q4.

Azfar Shakeel: We are trying to stabilize the cost in relation to the revenue, and as we've mentioned, that we will further decrease the cost of the northern region in Q3 and Q4. If you ask me that what will be the best quarters in terms of the top line and bottom line, will be the Q1 of 2027. Reason being, in that quarter, the pain of all the things will be wiped out from the P&L.

Speaker #2: If you ask me that what will be the best quarters in terms of the top line and bottom line will be the Q1 of 2027.

Speaker #2: Reason being but in that quarter the pain of all the things will be wiped out from the P&L. So this is my answer to your questions.

Azfar Shakeel: This is my answer to your questions.

Speaker #1: Thank you, Manjman. Our last question in the chat box comes from Titania. It says: Could you please share your outlook on the car rental market, other than the northern region?

[Company Representative] (Assembly Capital): Thank you, management. Our last question in the chat box comes from Titania. It says, Could you please share your outlook on the car rental market other than the northern region?

Operator: Thank you, management. Our last question in the chat box comes from [Titania.] It says, Could you please share your outlook on the car rental market other than the northern region?

Speaker #2: Oh okay. So let me answer this one again in multiple segments. The first segment I will say is the leasing. In the leasing side usually there are two segments.

Azfar Shakeel: Ooh. Okay. Let me answer this one again in multiple segments. The first segment I will say is the leasing. In the leasing side, usually there are two segments, corporate and the government sector. We have seen that the government sector, in terms of the explored quarter, will become very active in Q2 of this year. We see a potential increase in that segment. The second thing, in terms of the corporate sector, I am optimistic that or the semi-government or the corporate sector, I'm optimistic that things will go back to the normal. People are, whatever they're holding in terms of their requirements, it will come in the coming quarters. On the leasing side, we are optimistic that it will be better as compared to the previous quarters. Now, in terms of the used car sales market, I will come to the rental in the last.

Speaker #2: Corporate and the government sector. We have seen that the government sector in terms of the expert portal which become very active in the Q2 of this year we see a potential increase in that segment.

Speaker #2: The second thing in terms of the corporate sector I am optimistic that or the semi government or the corporate sector I'm optimistic that things will go back to the normal people are whatever they are holding in terms of their requirements it will come in the coming quarters.

Azfar Shakeel: The second thing, in terms of the corporate sector, I am optimistic that or the semi-government or the corporate sector, I'm optimistic that things will go back to the normal. People are, whatever they're holding in terms of their requirements, it will come in the coming quarters. On the leasing side, we are optimistic that it will be better as compared to the previous quarters. Now, in terms of the used car sales market, I will come to the rental in the last.

Speaker #2: So on the leasing side we are optimistic that it will be better as compared to the previous quarters. Now in terms of the used car sales market I will come in the rental in the last.

Speaker #2: Used car sales market it is also we have seen that due to the supply of the vehicles which has started painting the market has increased the prices which is evident from our numbers again this is based on our own buying and selling of the vehicles.

Azfar Shakeel: Used car sales market, we have seen that due to the supply of the vehicles, which has started filling the market, has increased the prices, which is evident from our numbers. Again, this is based on our own buying and selling of the vehicles. If you see that purchase price recovery was 67 in Q4 of 2025 when nothing was there. We saw that the challenge happened, and even then we have 40 days, 65.3, and then we saw that our PP&E ratio went up 67 compared to 42 months. We saw that there is an impact of this one. Now, in terms of the rental side, we are optimistic on a couple of areas on the rental side. One is an Expo 2030 is there. We have seen that the government is focusing towards the World Cup 2034.

Speaker #2: If you see that purchase price recovery was 67 in Q4 of 25 when nothing was there. And then we saw that the challenge happened and even then we have 40 days 65.3 and then we saw that our PPDW ratio went up 67 compared to 42 months.

Azfar Shakeel: We saw that the challenge happened, and even then we have 40 days, 65.3, and then we saw that our PP&E ratio went up 67 compared to 42 months. We saw that there is an impact of this one. Now, in terms of the rental side, we are optimistic on a couple of areas on the rental side. One is an Expo 2030 is there. We have seen that the government is focusing towards the World Cup 2034.

Speaker #2: So we saw that there is an impact of this one. Now in terms of the rental side we are optimistic on couple of areas on the rental side.

Speaker #2: One is that explore 2030 is there. We have seen that the government is focusing towards the World Cup 2034. These two major projects which will have an impact specifically in the western region and the central region for a short term rental as well as for the long term rental.

Azfar Shakeel: These two major projects, which will have an impact specifically in the western region and the central region for a short-term rental as well as for the long-term rental. In terms of the rental side, we also seen some activity in the short-term rental in the Expo, which is also encouraging for us to have better numbers in the coming quarters. These are the things. Plus, we are optimistic on the event side that the events which are planned in Q3 and Q4, that will happen. Based on that, yes, we are optimistic that we will be able to generate revenues in the coming quarters. All these things are subject to the things unfold on geopolitical situation on the scene coming in coming quarters also. As a business, we always have approach of optimistic, but we are also ready for any unforeseen situations.

Speaker #2: In terms of the rental side we also seen some activity in the short term rental in the explore which is also encouraging for us to have better numbers in the coming quarters.

Speaker #2: So these are the things plus we are optimistic on the event side that the events which are planned in Q3 and Q4 that will yes we are optimistic that we will be able to generate revenue in the coming quarters.

Azfar Shakeel: These are the things. Plus, we are optimistic on the event side that the events which are planned in Q3 and Q4, that will happen. Based on that, yes, we are optimistic that we will be able to generate revenues in the coming quarters. All these things are subject to the things unfold on geopolitical situation on the scene coming in coming quarters also. As a business, we always have approach of optimistic, but we are also ready for any unforeseen situations.

Speaker #2: All these things are subject to the things unfold on a geopolitical situation on the screen coming in coming quarters also. So this is we are as a business we are also we always have approach of optimistic but we are also ready for any unforeseen situations.

Speaker #1: Thank you Manjman. As we are nearing the end of our call I would give it back to you Ms. Manjman to give their concluding remarks.

[Company Representative] (Assembly Capital): Thank you, management. As we are nearing the end of our call, I would give it back to Lumi's management to give their concluding remarks.

Operator: Thank you, management. As we are nearing the end of our call, I would give it back to Lumi's management to give their concluding remarks.

Speaker #2: Thank you Judith. Thank you very much for participating in our earning second quarter earning call. And we look forward for you to see and give you the quarters three numbers in October and we are optimistic about our results in the coming quarters.

Azfar Shakeel: Thank you, Jules. Thank you very much for participating in our Q2 earnings call, we look forward for you to see and give you the Q3 numbers in October. We're optimistic about our results in the coming quarters, and we look forward for it. Thank you.

Azfar Shakeel: Thank you, [Katrina]. Thank you very much for participating in our Q2 earnings call, we look forward for you to see and give you the Q3 numbers in October. We're optimistic about our results in the coming quarters, and we look forward for it. Thank you.

Speaker #2: And we look forward to seeing you. Thank you.

Speaker #1: Assembly Capital would like to thank you, Ms. Manjman, for taking the time to conduct this call. We would also like to thank all participants for attending.

[Company Representative] (Assembly Capital): Assembly Capital would like to thank Lumi's management for taking the time to conduct this call. We would like to also thank all participants for attending. We wish you a pleasant day. Thank you. You may now disconnect.

Operator: Assembly Capital would like to thank Lumi's management for taking the time to conduct this call. We would like to also thank all participants for attending. We wish you a pleasant day. Thank you. You may now disconnect.

Browse all earnings call transcripts

Q2 2026 Lumi Rental Co Earnings Call

Request TrialDemo

Lumi Rental

Earnings