Q2 2026 United International Transportation Co SJSC Earnings Call

August 10, 2026

Ravish Tatly: This webinar is being recorded and summarized.

Speaker #1: Is being recorded and summarized.

Speaker #2: Hello everyone, this is Miren, and I heard from EFG Hermès and welcome to budget Q2 2026 results conference call. I'm pleased to be joined today by Mr. Fawwaz Danish, CEO, and Dr. Ravish Tatli, CFO.

Mirna Maher [Associate Director: Hello, everyone. This is Mirna Maher from EFG Hermes, and welcome to Budget's Q2 2026 results conference call. I am pleased to be joined today by Mr. Fawaz Danish, CEO, and Dr. Ravish Tatly, CFO. We will first start with a quick update from management, and then we will open the floor for the Q&A session. Gentlemen, please go ahead.

Mirna Maher: Hello, everyone. This is Mirna Maher from EFG Hermes, and welcome to Budget's Q2 2026 results conference call. I am pleased to be joined today by Mr. Fawaz Danish, CEO, and Dr. Ravish Tatly, CFO. We will first start with a quick update from management, and then we will open the floor for the Q&A session. Gentlemen, please go ahead.

Speaker #2: We will first start with a quick update from management, and then we'll open the floor for the Q&A session. Gentlemen, please go ahead.

Speaker #3: Assalamu alaikum, and most welcome, everybody. This is Fawwaz Danish. I have Dr. Ravish Tatli with me, and also, from the Investor Relations team, Mr. Badr Al-Harbi from our side.

Fawaz Danish: Salam alaikum. Most welcome, everybody. This is Fawaz Danish. I have Dr. Ravish Tatly with me, and I have also from the investment relation, Mr. Badr AlHarbi from our side. As usually, we meet after we announce our results, and we had enough time, I think, for all to read the results. If you may allow me, we can start immediately the Q&A session, unless Dr. Ravish would like to add anything to that.

Speaker #3: As usual, we meet after we announce our results, and we had enough time, I think, for all to read the results. And if you may allow me, we can start immediately.

Speaker #3: The Q&A session unless Dr. Ravish would like to add anything to that.

Speaker #4: Yes, maybe I'll just, in addition to what you said—as everyone has seen, the results and our earnings call presentation have already been circulated. So, as you have seen, Alhamdulillah, our performance and our profitability have improved quite a bit from Q1, though still, it is not as much as we would like, I will say.

Ravish Tatly: Yes. In addition to what you said, as everyone has seen the results, our earning call presentation is already circulated. As you have seen, Alhamdulillah, our performance, our profitability has quite improved from the Q1. Though still it is not as per of our liking, I will say. But things are improving, and we are expecting things to improve in coming quarters, Inshallah. We are very happy and proud to announce our result where we have done SAR 92 million for this Q2. Of course, it includes the SAR 25 million, which is one time other income. But even excluding that, we have SAR 67 million profitability with a significant growth in the revenue and better management on the expense. We can go for Q&A.

Ravish Tatli: Yes. In addition to what you said, as everyone has seen the results, our earning call presentation is already circulated. As you have seen, Alhamdulillah, our performance, our profitability has quite improved from the Q1. Though still it is not as per of our liking, I will say. But things are improving, and we are expecting things to improve in coming quarters, Inshallah. We are very happy and proud to announce our result where we have done SAR 92 million for this Q2. Of course, it includes the SAR 25 million, which is one time other income. But even excluding that, we have SAR 67 million profitability with a significant growth in the revenue and better management on the expense. We can go for Q&A.

Speaker #4: But things are improving, and we are expecting things to improve in coming quarters, inshallah. And we are very happy and proud to announce our result, where we have done 92 million for this quarter too.

Speaker #4: Of course, it includes the 25 million, which is one-time other income, but even excluding that, we have 67 million in profitability, with significant growth in revenue.

Speaker #4: And the better management on the expense we can go for Q&A.

Speaker #2: Thank you. If you'd like to ask a question, please use the raise-hand function, or you can type your question in the Q&A chat box.

Mirna Maher [Associate Director: Thank you. If you would like to ask a question, please use the raise hand function, or you can type your question in the Q&A chat box. We will pause for a moment until we get our first question. We have a question in the chat from Salma Afifi. This quarter showed a lower vehicle depreciation. Should we assume the same level moving forward?

Mirna Maher: Thank you. If you would like to ask a question, please use the raise hand function, or you can type your question in the Q&A chat box. We will pause for a moment until we get our first question. We have a question in the chat from Salma Afifi. This quarter showed a lower vehicle depreciation. Should we assume the same level moving forward?

Speaker #2: We will pause for a moment until we get our first question. We have a question in the chat from Salma Afifi. This quarter showed a lower vehicle depreciation.

Speaker #2: Should we assume the same level moving forward?

Speaker #4: Yes, I can answer this. Yes, you can assume the same level of depreciation for the coming quarters. We are almost on the same depreciation rate what we have for 24, 25, and we are expecting it to continue, inshallah.

Ravish Tatly: Yes, I can answer this. Yes, you can assume the same level of depreciation for the coming quarters. We are almost on the same depreciation rate what we have for 2024, 2025, and we are expecting it to continue, Inshallah.

Ravish Tatli: Yes, I can answer this. Yes, you can assume the same level of depreciation for the coming quarters. We are almost on the same depreciation rate what we have for 2024, 2025, and we are expecting it to continue, Inshallah.

Speaker #2: Thank you. The next question is: to what extent has utilization normalized in the short term rental segment?

Mirna Maher [Associate Director: Thank you. The next question is, to what extent has utilization normalized in the short-term rental segment?

Mirna Maher: Thank you. The next question is, to what extent has utilization normalized in the short-term rental segment?

Speaker #4: See, short term rentals yes, yes, boss, please go ahead, go ahead, please.

Fawaz Danish: See short-term rental

Ravish Tatly: Yes, boss. Please go ahead, please.

Ravish Tatli: Yes, boss. Please go ahead, please.

Speaker #3: Let me show some improvement, actually. We have seen, since summer started, an increase in our utilization. It has picked up by about 5 to 6 percent until now.

Fawaz Danish: Let me show some improvement. Actually, we have seen since summer started in our utilization. It has picked up about 5% to 6% until now. We are managing utilization almost 64%, 65% in short term, of course, but long term, as we usually say, it is 90% and more. The short term, we expect it to be in an average of 65%, 67% for this quarter, and some improvement will be by the last quarter this year. Hopefully, we achieve 68%, 70% for the fleet that we have. Generally speaking, yes, we have seen a better utilization compared to the Q2, and lately, Q1 this year.

Speaker #3: We are managing utilization almost 64, 65. In short term, of course, but long term, as we usually say, it's 90 percent and more. The short term, we expect it to be in an average of 65, 67 for this quarter.

Speaker #3: And some improvement will be by the last quarter, this year, hopefully we achieve 68, 70 percent for the fleet that we have. So general speaking, yes, we have seen a better utilization compared to the second quarter and lately first quarter this year.

Speaker #2: Thank you. The next question: can you give some color on the change in depreciation policy?

Mirna Maher [Associate Director: Thank you. The next question, can you give some color on the change in depreciation policy?

Mirna Maher: Thank you. The next question, can you give some color on the change in depreciation policy?

Ravish Tatly: Actually, it is not change in depreciation policy. It is more of the restating the depreciation rate, what we were doing for last year. We took more aggressive or say conservative approach on the depreciation rate earlier, as explained. But as the resale prices are quite stable, so we said we will continue with the same depreciation rate what we were having in the past. Actually, it is no change in the depreciation policy as such.

Ravish Tatli: Actually, it is not change in depreciation policy. It is more of the restating the depreciation rate, what we were doing for last year. We took more aggressive or say conservative approach on the depreciation rate earlier, as explained. But as the resale prices are quite stable, so we said we will continue with the same depreciation rate what we were having in the past. Actually, it is no change in the depreciation policy as such.

Speaker #4: Actually, it is not change in depreciation policy. It is more of the restrating the depreciation rate what we were doing for last year, though we took more aggressive or, say, conservative approach on the depreciation rate earlier, as explained.

Speaker #4: But as the resale prices are quite stable, so we said we'll continue with the same depreciation rate what we were having in the past.

Speaker #4: So actually, it's no change in the depreciation policy as such.

Speaker #3: Yeah, I just want to emphasize there is no change in the policy of depreciation, but rather a reassessment of resale value based on our history and expected future.

Fawaz Danish: Yeah, I just want to emphasize there is no change in the policy of depreciation, but rather reassessment of resale value based on our history and expected future. This is also always done by a professional third party who come and assess and give us that report. So there is no change in the policy, but rather going back to the level of 25 depreciation.

Speaker #3: And this is also always done by a professional third party who come and assess and give us that report. So there is no change in the policy, but rather going back to the level of 25 depreciation.

Speaker #2: The next question is: can you elaborate on the 15.9 loss recorded under the sold vehicle segment? Is it a loss on a net basis?

Mirna Maher [Associate Director: The next question is, can you elaborate on the SAR 15.9 loss recorded under the sold vehicle segment? Is it a loss on a net basis?

Mirna Maher: The next question is, can you elaborate on the SAR 15.9 loss recorded under the sold vehicle segment? Is it a loss on a net basis?

Ravish Tatly: Yeah, I can explain that part. It is more of like, I'm sorry.

Ravish Tatli: Yeah, I can explain that part. It is more of like, I'm sorry.

Speaker #4: Yeah, I can explain that part. It is more of like I'm sorry?

Speaker #3: Saying, go ahead, Dr. Ravish.

Fawaz Danish: Go ahead, Dr. Ravish.

Speaker #4: Yeah, yeah. See, basically it is more like the difference between the resale price and the net book value. So, the difference between these two will either reflect as a gain or loss, or profit or loss, you can say.

Ravish Tatly: Yeah. See, basically it is more of the difference between the resale price versus the net book value. So difference between these two either reflect as a gain or loss, or profit or loss, you can say. Now, what we have seen, the recovery ratio is improving, and we are purely in line with what we were doing in past.

Ravish Tatli: Yeah. See, basically it is more of the difference between the resale price versus the net book value. So difference between these two either reflect as a gain or loss, or profit or loss, you can say. Now, what we have seen, the recovery ratio is improving, and we are purely in line with what we were doing in past.

Speaker #4: Now, what we have seen is that the recovery ratio is improving, and we are purely in line with what we were doing in the past.

Speaker #4: In between there was a drop on the resale price, now as we said, like we see there is some improvement because nowadays there is a short supply of the new vehicle, which always contribute to the better profitability.

Fawaz Danish: In between, there was a drop on the retail price. Now, as we said, we see there is some improvement because nowadays there is a short supply of the new vehicle, which always contribute to the better profitability. So this is like we were factoring this part.

Speaker #4: So this is like we were factoring this part.

Speaker #2: The next question is: Can you share anything about the Transport General Authority approval to deal with car-hailing apps like Uber and Careem?

Mirna Maher [Associate Director: The next question is, can you share anything about the Transport General Authority approval to deal with car-hailing apps like Uber and Careem?

Mirna Maher: The next question is, can you share anything about the Transport General Authority approval to deal with car-hailing apps like Uber and Careem?

Speaker #3: Yes.

Speaker #4: Yeah, Mr. Forward, please.

Fawaz Danish: Yes.

Ravish Tatly: Yeah. Mr. Fawaz, please.

Ravish Tatli: Yeah. Mr. Fawaz, please.

Speaker #3: Very much. I can tell you yes, it has started already. And we are already in discussion with the ride hailing. And this could be a good opportunity really for the future, I would say, maybe by the fourth quarter that will be already.

Fawaz Danish: Very much. I can tell you, yes, it has started already, and we are already in discussion with the ride-hailing, and this could be a good opportunity, really, for the future. I would say maybe by Q4 that will be already approved and done, so we can see much better results, Inshallah, in 2027, 2028, if this has happened. But the answer is yes, very much. It was a longstanding achievement, I would say, until we achieved it, and we have agreed with the authority that we can always rent our cars to the ride-hailing individuals.

Speaker #3: Approved and done. So we can see much better results, inshallah, in 27, 28 if this has happened. But the answer is yes, very much.

Speaker #3: It was a long-standing achievement, I would say, until we achieved it. And we have agreed with the authority that we can always rent our cars to the ride-hailing individuals.

Speaker #2: Thank you. The next question is on the used car sales segment. It seems that this is currently the main challenge. What is your outlook for the used car market over the next three to six months, and six to twelve months?

Mirna Maher [Associate Director: Thank you. The next question is on the used car sales segment. It seems that this is currently the main challenge. What is your outlook for the used car market over the next 3 to 6 months and 6 to 12 months? Do you expect conditions to improve, and what margins should we expect from this segment?

Mirna Maher: Thank you. The next question is on the used car sales segment. It seems that this is currently the main challenge. What is your outlook for the used car market over the next 3 to 6 months and 6 to 12 months? Do you expect conditions to improve, and what margins should we expect from this segment?

Speaker #2: Do you expect conditions to improve, and what margins should we expect from this segment?

Speaker #3: Tell you the truth, I believe yes. We started to see last three months some improvement compared to what we had in the first quarter and fourth quarter last year.

Fawaz Danish: Tell you the truth, I believe yes. We started to see, last 3 months, some improvement compared to what we had in Q1 and Q4 last year. But generally speaking, why we expect it to be better, because there is a short of supply in the market. We started to see it. Especially, all new delivery are expected late September or October, and that is still expected. With what's going around us, we cannot guarantee. Based on that, there will be much more demand on used car due to short of supply of new vehicles coming to the market, and this is a cycle that we have been always seeing during the years. So the improvement will be there. Should it be massive? No.

Speaker #3: But generally speaking, why do we expect it to be better? Because there is a shortage of supply in the market. We started to see it, especially since all new deliveries are expected in late September or October.

Speaker #3: And that is still expected. With what's going around us, we cannot guarantee. Based on that, there will be much more demand on used car due to short of supply of new vehicles coming to the market.

Speaker #3: And this is a cycle that we have always seen over the years, so the improvement will be there. Should it be massive? No.

Speaker #3: But at least I can guarantee that the resale prices will be much more stable and more to the improvement side until end of the year.

Fawaz Danish: At least I can guarantee that the resale prices will be much more stable and more to the improvement side until end of the year. Starting 2027, we will look at the, again, supply chain, what's going to happen, availability of cars. Because see, the supply of cars, it does not mean only shipping issue, but some also manufacturer has been affected by their supply of chain. So the manufacturers are not manufacturing as much as they used to do. So this will all be judgmental in 2027 based on the supply of vehicles to the market. Until end of the year, I see stability and a bit of even better resale value. Margin, it depends on, of course, the book value of the vehicle. But what we care about here is much more of the resale amount that we get for each and every car.

Speaker #3: Starting in 2027, we will look at the supply chain again—what's going to happen, the availability of cars. Because, you see, the supply of cars does not mean only a shipping issue.

Speaker #3: But some also manufacturer has been affected by their supply of chain. So the manufacturers are not manufacturing as much as they used to do.

Speaker #3: So this will all be judgmental in 2027 based on the supply of vehicles to the market. Until the end of the year, I see stability and even slightly better resale value.

Speaker #3: Margin, it depends on, of course, the book value of the vehicle. But what we care about here is much more of the resale amount that we get for each and every car.

Speaker #3: We used to have up to 68, 70 percent. We went down to 62, 63 percent. So we need an average of, let's say, 67, 68 we are good enough with that.

Fawaz Danish: We used to have up to 68%, 70%. We went down to 62%, 63%. We need an average of, let's say, 67%, 68%. We are good enough with that.

Speaker #4: And it is quite evident if you see that the sale proceeds for Q2 are much higher compared to Q1. But the book loss, I would say, the difference between the resale price or realized price versus the net book value—the losses booked—is just around less than what it was before.

Ravish Tatly: And it is quite evident if you will see that sale proceed for Q2 is much higher compared to Q1. But the book loss, I will say, the difference between the resale price or realized price versus the net book value, the losses booked is just around less than what it was there, though the volume is much higher this. We see that recovery ratio of the vehicles are improving due to the short supply, what we have seen.

Ravish Tatli: And it is quite evident if you will see that sale proceed for Q2 is much higher compared to Q1. But the book loss, I will say, the difference between the resale price or realized price versus the net book value, the losses booked is just around less than what it was there, though the volume is much higher this. We see that recovery ratio of the vehicles are improving due to the short supply, what we have seen.

Speaker #4: Though the volume is much higher this. So we see that the recovery ratio of the vehicles is improving due to the short supply, which we have seen.

Speaker #2: Thank you. The next question is: how has short-term rental utilization moved between Q1 and Q2, and how much of the reversal of higher depreciation in Q1 was done in Q2?

Mirna Maher [Associate Director: Thank you. The next question is, how has short rental utilization moved between Q1 and Q2, and how much of the reversal of higher depreciation in Q1 was done in Q2? And the related question-

Mirna Maher: Thank you. The next question is, how has short rental utilization moved between Q1 and Q2, and how much of the reversal of higher depreciation in Q1 was done in Q2? And the related question-

Speaker #4: See, we have not done any direct reversal. Of the depreciation in Q2 from Q1, we have just adjusted our adjusted the depreciation rate to the same level while spreading the impact of the Q1, which we took over a period of next nine months, starting from April.

Fawaz Danish: See, we have not done any direct reversal of the depreciation from Q1. We have just adjusted the depreciation rate to the same level while spreading the impact of Q1, which we took over a period of next 9 months, starting from April. So any reversal is not there on the depreciation. If talking about the short rental revenue part, which I just saw. See, last quarter versus this quarter, if you will see, the situation was last month of Q1 was really impacted. But for Q2, initially 1 and half months were impacted. Things just started improving only after 15 May. So that shows the softness in the overall revenue. But when we will see the utilization improvement, which started from 15 May till 30 June, was quite reasonable to

Speaker #4: So it is not any reversal is not there on the depreciation. About talking about the short rental, revenue part, which I just saw, I mean, see, you last quarter versus this quarter, if you will see, the situation was last month of the Q1 was really impacted.

Speaker #4: But for the Q2, initially one and a half months were impacted. Things started improving only after 15th of May. So that shows the softness in the overall revenue.

Speaker #4: But when we look at the utilization improvement, which started from May 15th until June 30th, it was quite reasonable to cover some of the gap or the short.

Ravish Tatly: Covered some of the gap or the short, but it cannot cover all. That is the reason in totality when you will see there was an impact of last full month, whereas in Q2, we have the impact of one and a half month. That is the only reason. But we are expecting things gradually improve, provided nothing goes wrong again, Inshallah. We are positive on that part that things will improve. But, external factors are not in our hand, what is happening in the region.

Ravish Tatli: Covered some of the gap or the short, but it cannot cover all. That is the reason in totality when you will see there was an impact of last full month, whereas in Q2, we have the impact of one and a half month. That is the only reason. But we are expecting things gradually improve, provided nothing goes wrong again, Inshallah. We are positive on that part that things will improve. But, external factors are not in our hand, what is happening in the region.

Speaker #4: But it cannot cover all. So that is the reason, in totality, when you look at it, there was an impact for the last full month, whereas in Q2, we had an impact of one and a half months.

Speaker #4: That is the only reason. But we are expecting things gradually improve, provided nothing goes wrong again, inshallah. We are positive on that part that things will improve.

Speaker #4: But I mean, external factors are not in our hands—what's happening in the region.

Speaker #2: Thank you. The next question is: Should we expect further losses from used car sales in Q3?

Mirna Maher [Associate Director: Thank you. The next question is, should we expect further losses from used car sales in Q3?

Mirna Maher: Thank you. The next question is, should we expect further losses from used car sales in Q3?

Speaker #4: As I explained, the losses you are referring to are book losses because they are derived numbers based on the depreciation policy you have.

Ravish Tatly: As I explained the losses what you are referring, it is a book loss because it is a derived number based on what depreciation policy you have. Now, it depends like how much recovery ratio will improve. As Mr. Fawaz explained, from 68 it went down to 63, and now it is coming in the range of 64, 65. If it will go back to 68, there will be no losses. If it will remain at the range of 64, 65, you will see some book losses. That is all. But it will not be very high. We know that it is a purely non-cash item, which is not really impacting our EBITDA.

Ravish Tatli: As I explained the losses what you are referring, it is a book loss because it is a derived number based on what depreciation policy you have. Now, it depends like how much recovery ratio will improve. As Mr. Fawaz explained, from 68 it went down to 63, and now it is coming in the range of 64, 65. If it will go back to 68, there will be no losses. If it will remain at the range of 64, 65, you will see some book losses. That is all. But it will not be very high. We know that it is a purely non-cash item, which is not really impacting our EBITDA.

Speaker #4: Now, it depends on how much the recovery ratio will improve. As Mr. Fawwaz explained, from 68, it went down to 63, and now it's coming in the range of 64 to 65.

Speaker #4: If it goes back to 68, there will be no losses. If it remains in the range of 64 to 65, you will see some book losses.

Speaker #4: That's all. But it will not be very high. We know that. It's a purely, purely non-cash item, which is not really, really impacting your EBITDA.

Speaker #3: So, what we care about, Dr. Ravish, is the recovery amount we get for each and every car. And that will also show you the future trend.

Fawaz Danish: So what we care about, Dr. Ravish, is the recovery amount we get for each and every car.

Ravish Tatly: Absolutely.

Ravish Tatli: Absolutely.

Fawaz Danish: And that will show you also the future trend. So from quarter to quarter, it could be different, but at the end of the day, it looks positive for me, the resale value of the vehicles until end of the year.

Speaker #3: So from quarter to quarter, it could be different. But at the end of the day, it looks positive for me, the resale value of the vehicles until the end of the year.

Speaker #4: Inshallah, yes.

Ravish Tatly: Inshallah. Yes.

Ravish Tatli: Inshallah. Yes.

Speaker #2: The next question is from a cost side. Can you please give an update on the comprehensive insurance and its impact on results?

Mirna Maher [Associate Director: The next question is, from a cost side, can you please give an update on the comprehensive insurance, and its impact on results?

Mirna Maher: The next question is, from a cost side, can you please give an update on the comprehensive insurance, and its impact on results?

Speaker #3: Dr. Ravish, you may see how much it is. But let me explain also. In amount, it could be a couple of millions. But that recovery will be offset against the policy we used to have in '25 by getting the losses on total loss.

Fawaz Danish: Dr. Ravish, you may see how much is it, but let me explain also. In amount, it could be couple of millions, but that recovery will be offset against the policy we used to have in 2025 by getting the losses on total loss. Here we are getting a recovery on that total losses. So, please explain it well.

Speaker #3: Here we are getting a recovery on that total losses. So please explain it will. How this would work with a full comprehensive insurance.

Ravish Tatly: Sure.

Ravish Tatli: Sure.

Fawaz Danish: How this would work with a full comprehensive insurance.

Speaker #4: See, previously we were having the insurance, which was like kind of hybrid. It was a combination of the TP and the comprehensive. Now we have full comprehensive for all the leases vehicle and the rentals.

Ravish Tatly: Previously we were having the insurance, which was like kind of hybrid. It was a combination of the TP and the comprehensive. Now we have full comprehensive for all the leases vehicle and the rentals. So though it will appear like my insurance premium has increased on quarterly basis around SAR 7 to 8 million, but the advantage which we will be getting on the recovery from the insurance by declaring the total loss. So there will be a minimum cap of, say, around 60%. So that will help me to cover the total loss vehicle, and that will reflect on the improvement on the either margin on the gain when we sell the vehicle or reducing the losses on that. So directly, you will not be able to match it, but the advantage will appear when we will sell the vehicle.

Ravish Tatli: Previously we were having the insurance, which was like kind of hybrid. It was a combination of the TP and the comprehensive. Now we have full comprehensive for all the leases vehicle and the rentals. So though it will appear like my insurance premium has increased on quarterly basis around SAR 7 to 8 million, but the advantage which we will be getting on the recovery from the insurance by declaring the total loss. So there will be a minimum cap of, say, around 60%. So that will help me to cover the total loss vehicle, and that will reflect on the improvement on the either margin on the gain when we sell the vehicle or reducing the losses on that. So directly, you will not be able to match it, but the advantage will appear when we will sell the vehicle.

Speaker #4: So, though it will appear like my insurance premium has increased on a quarterly basis by around 7 to 8 million, the advantage will be in the recovery from the insurance by declaring the total loss.

Speaker #4: So there will be a minimum cap of, like, say, around 60%. So that will help me to cover the total loss vehicle, and that will reflect on the improvement in the margin when we sell the vehicle, or on reducing the losses on that.

Speaker #4: So directly you will not be able to match it, but the advantage will appear when we will sell the vehicle. Because as I said, like if the total loss, if it is not covered under the comprehensive portion, and if it will go with the TP, then say a vehicle which is like for $100, you are realization is only 20.

Ravish Tatly: Because as I said, if the total loss, if it is not covered under the comprehensive portion, and if it will go with the TP, then say, a vehicle which is like for SAR 100, your realization is only SAR 20. Whereas under the comprehensive insurance policy, there is a bracket where realization will not be lower than, say, 60%. So that will give us a recovery on that part. Plus, we will be able to recover some maintenance cost, when the vehicles will be repaired or even in our workshop, which are considered to be approved workshop for the insurance purpose.

Ravish Tatli: Because as I said, if the total loss, if it is not covered under the comprehensive portion, and if it will go with the TP, then say, a vehicle which is like for SAR 100, your realization is only SAR 20. Whereas under the comprehensive insurance policy, there is a bracket where realization will not be lower than, say, 60%. So that will give us a recovery on that part. Plus, we will be able to recover some maintenance cost, when the vehicles will be repaired or even in our workshop, which are considered to be approved workshop for the insurance purpose.

Speaker #4: Whereas under the comprehensive insurance policy, there is a bracket where the realization will not be lower than, say, 60 percent.

Speaker #4: So that will give us a recovery on that part. Plus, we will be able to recover some maintenance costs when the vehicles are repaired, even in our own workshops, which are considered to be approved workshops for insurance purposes.

Speaker #2: Thank you. The next question is: Why did rental revenue decline on a year-on-year and quarter-on-quarter basis? And what was the utilization level in Q2?

Mirna Maher [Associate Director: Thank you. The next question is, why did rental revenue decline on a year-on-year and Q-on-Q basis, and what was the utilization level in Q2?

Mirna Maher: Thank you. The next question is, why did rental revenue decline on a year-on-year and Q-on-Q basis, and what was the utilization level in Q2?

Speaker #4: I just explained this a while ago, that with the movement in Q1, it was one month, but in Q2, it was still mid-May.

Ravish Tatly: I just explained this a while ago, that how the moment like Q1 it was one month, but Q2 it was still mid of May. From 15 May onwards, things started improving. Even though your June may be strong, you have the shortfall at the beginning of the quarter. That's the only reason.

Ravish Tatli: I just explained this a while ago, that how the moment like Q1 it was one month, but Q2 it was still mid of May. From 15 May onwards, things started improving. Even though your June may be strong, you have the shortfall at the beginning of the quarter. That's the only reason.

Speaker #4: And from May 15 onward, things started improving. So even though your June may be strong, you have the shortfall at the beginning of the quarter.

Speaker #4: That's the only reason.

Speaker #3: And also, the question is, why is it declining? We know what's happening in the area—the travel and the tourism and everything around us—and the low demand on airports. That's the only reason.

Fawaz Danish: Also, the question is why it's declining. We know what's happening in the area, and the travel, and the tourism and everything around us, and the low demand on airports. That's the only reason. Once this is over, I think we get better and go back to the normal days. In 2027, I guess it will be even better than 2025 utilization. That's what we expect. Due to, we're seeing in early 2027, the AFC Asian Cup in Saudi, and a lot of activity will be normalized and much more demand during those activities on short-term rental. So what's happening is not normal. There is a reason. Once this reason is over, I think we get back to normality.

Speaker #3: Once this is over, I think we get better and go back to the normal days, and in '27, I guess it will be even better than '25 utilization.

Speaker #3: That's what we expect. Due to, you know, what we're seeing in early '27, the Asian Football Cup in Saudi, and a lot of activity will be normalized with much more demand during those activities for short-term rentals.

Speaker #3: So, what's happening is not normal. There is a reason. Once this reason is over, I think we get back to normality.

Speaker #2: And a related question is: Have you seen any improvement in utilization and operating conditions across both the short-term and long-term rental segments? And what is your outlook for each segment over the coming quarters?

Ravish Tatly: Inshallah.

Ravish Tatli: Inshallah.

Mirna Maher [Associate Director: A related question is, have you seen any improvement in utilization and operating conditions across both the short-term and long-term rental segments? What is your outlook for each segment over the coming quarters? Are geo-political developments still having a meaningful impact on demand and utilization or is the impact now limited?

Mirna Maher: A related question is, have you seen any improvement in utilization and operating conditions across both the short-term and long-term rental segments? What is your outlook for each segment over the coming quarters? Are geo-political developments still having a meaningful impact on demand and utilization or is the impact now limited?

Speaker #2: Are due political developments still having a meaningful impact, or on demand and utilization, or is the impact now limited?

Speaker #3: Let me do this Dr. Ravish. As we. We just said, utilization in short term which short-term business represents almost 25 percent of our business or less than that a little bit, but long-term represents the majority.

Fawaz Danish: Let me do this, Dr. Ravish.

Ravish Tatly: Yes.

Ravish Tatli: Yes.

Fawaz Danish: As we just said, utilization in short term, which short-term business represents almost 25% of our business or less than that a little bit, but long term represents the majority. Long term is still stable, yet I can tell you there are demands where the supply issue is still waiting for many cars to be delivered to the client until we get it. On the other side, the normal business is there in long term. Short term, which is being really affected, is due to the situation we have. Yet, Dr. Ravish just explained, in July, it was much better because of the vacation or school vacation and the summer.

Speaker #3: Long-term is still stable. Yet I can tell you there are demands where the supply issue—we're still waiting for many cars to be delivered to the client until we get it.

Speaker #3: And on the other side, the normal business is there in the long term. Short term, which is being really affected, it's due to the situation we have.

Speaker #3: Yet Dr. Ravish just explained in July it was much better because of the vacation, or school vacation, and the summer. So we expected it to continue.

Ravish Tatly: Yeah

Ravish Tatli: Yeah

Fawaz Danish: July, it was much better because of the vacation or school vacation and-

Ravish Tatly: Right

Ravish Tatli: Right

Fawaz Danish: People get used to what's happening, and it's becoming normal for those days. Until this is over 100%, we would not see a 70%-75% utilization on short-term rental. During this time, also, we are selling more cars in short-term rental if it's not been utilized enough.

Speaker #3: Until the end of the year, and as people get used to what's happening, it's becoming normal for those days. Until this is over, 100 percent, we would not see a 70–75 percent utilization on short-term rental.

Speaker #3: So during this time, also, we are selling more cars in short-term rental if they're not being utilized enough. And as we announced in our results, we have sold a number of vehicles in Q2.

Fawaz Danish: As we announced in our results, we have sold numbers of vehicles in Q2 so to improve our utilization in short term, and we are ready to induct new vehicles if the demand is there.

Speaker #3: So, to improve our utilization in the short term, we are ready to induct new vehicles if the demand is there.

Speaker #4: Yeah, absolutely right. In fact, see, we are monitoring the utilization very closely. And as we saw, like the utilization is starting improving only post mid-May, so we were monitoring and we have not added, to be honest, like we have not added more fleet on the short rental.

Ravish Tatly: You are absolutely right. In fact, we are monitoring the utilization very closely. As we saw, the utilization started improving only post mid-May. We were monitoring and we have not added, to be honest, we have not added more fleet on the short rental. In fact, whatever de-fleeting was happening, as we saw that utilization is still is not at a desired level. We said bringing an idling will not help us. We have trimmed the fleet on the short rental to maintain the better utilization. As Mr. Fawaz said, as and when the improvement will come, we can add the vehicle. We are not worried on that part. That is quite manageable for us. The advantage why doing that, it also reduces my depreciation. It also reduces my insurance and the regular maintenance.

Ravish Tatli: You are absolutely right. In fact, we are monitoring the utilization very closely. As we saw, the utilization started improving only post mid-May. We were monitoring and we have not added, to be honest, we have not added more fleet on the short rental. In fact, whatever de-fleeting was happening, as we saw that utilization is still is not at a desired level. We said bringing an idling will not help us. We have trimmed the fleet on the short rental to maintain the better utilization. As Mr. Fawaz said, as and when the improvement will come, we can add the vehicle. We are not worried on that part. That is quite manageable for us. The advantage why doing that, it also reduces my depreciation. It also reduces my insurance and the regular maintenance.

Speaker #4: In fact, whatever de-fleeting was happening, as we saw, the utilization is still not at a desired level. So, we said that bringing in and idling will not help us.

Speaker #4: So we have trained the fleet on the short rental to maintain better utilization. And as Mr. Fawwaz said, as and when improvements come, we will adapt.

Speaker #4: We can add the vehicle. We are not worried about that part. So that is quite manageable for us. Not the advantage why we're doing that.

Speaker #4: It also reduces my depreciation. It also reduces my insurance and the regular maintenance. So, that also has been reflected in my Q2 result. Better management on the utilization and close monitoring is helping us.

Ravish Tatly: That also has been reflected in my Q2 result. That better management on the utilization, close monitoring is helping us. But the moment, from June onwards, when we have seen things are improving, but still it is not at a desired level. We normally in the Budget, we consider around 68% as the optimal utilization, and at 70%, we start adding more and more fleet. Still we have not seen that situation, but if that will happen, definitely we will be adding. In totality, what I am trying to say, the short rental fleet, which was, say, 13,000 to 14,000, it has come down, and that is like saving a depreciation insurance cost while your revenue is with the maximum number of vehicles which is trying to give you out of the available fleet. This will continue for some time, I guess.

Ravish Tatli: That also has been reflected in my Q2 result. That better management on the utilization, close monitoring is helping us. But the moment, from June onwards, when we have seen things are improving, but still it is not at a desired level. We normally in the Budget, we consider around 68% as the optimal utilization, and at 70%, we start adding more and more fleet. Still we have not seen that situation, but if that will happen, definitely we will be adding. In totality, what I am trying to say, the short rental fleet, which was, say, 13,000 to 14,000, it has come down, and that is like saving a depreciation insurance cost while your revenue is with the maximum number of vehicles which is trying to give you out of the available fleet. This will continue for some time, I guess.

Speaker #4: But the movement, like from June onwards, when we have seen things are improving—but still, it is not at the desired level.

Speaker #4: Like we normally, in the budget we consider around 68 percent as optimal utilization, and at 70 percent we start adding more and more fleet.

Speaker #4: So, still we have not seen that situation. But if that will happen, definitely we'll be adding. So, in totality, what I'm trying to say is: the short rental fleet, which was say 13,000 to 14,000, has come down.

Speaker #4: And that is like saving on depreciation and insurance costs, while your revenue is tied to the maximum number of vehicles you are trying to get out of the available fleet.

Speaker #4: So this will continue for some time, I guess. But as I said, when the movement starts touching 68 and above, we will start adding more fleet or will bring back the same level of short rental fleet.

Ravish Tatly: But as I said, the moment we will start touching 68% and above, we will start adding more fleet, or we will bring back the same level of short rental fleet. On the leasing part, there is a slowdown, in the sense there are orders, but people are going more cautious. The renewals are taking some time. They are asking us to hold the delivery. That also gives some heat on the expense because vehicles are already with us. That cycle is taking some time. But still, the lease business is quite stable. Short rental is still like even today, sometimes if some bad news comes and then if people do not travel, and then, of course, we see the fall in the utilization started at the airports. I think that once it is normal, I think things will be much better.

Ravish Tatli: But as I said, the moment we will start touching 68% and above, we will start adding more fleet, or we will bring back the same level of short rental fleet. On the leasing part, there is a slowdown, in the sense there are orders, but people are going more cautious. The renewals are taking some time. They are asking us to hold the delivery. That also gives some heat on the expense because vehicles are already with us. That cycle is taking some time. But still, the lease business is quite stable. Short rental is still like even today, sometimes if some bad news comes and then if people do not travel, and then, of course, we see the fall in the utilization started at the airports. I think that once it is normal, I think things will be much better.

Speaker #4: On the leasing part, there is a slowdown. In the sense that there are orders, but people are being more cautious. The renewals are taking some time.

Speaker #4: They're asking us to hold the delivery, so that also puts some pressure on expenses because the vehicles are already with us. So that cycle is taking some time.

Speaker #4: But still, the lease business is quite stable. Short rental is still, like even today, sometimes if some bad news comes, then people do not travel and, of course, we see a fall in the utilization starting at the airports.

Speaker #4: So, I think that once it is normal, things will be much better.

Speaker #3: In nature, what I would say is we see—and we are really optimistic about—the future: second, third, and fourth quarter, and definitely 2027.

Fawaz Danish: In a nutshell, what I would say, we see, and we are really optimistic about the future second and third and fourth quarter, and definitely

Ravish Tatly: Yes

Ravish Tatli: Yes

Fawaz Danish: 2027. The pressure we have is just based on the condition that we live with right now, and I don't think this will be forever. There has to be an end to it. Once that is over, things are good for us. Business in Saudi is doing well regarding the demand on leasing, and the traffic of individual traveler or corporate traveler within Saudi will improve. We can see the future much more stable. As I want to say, we are only under some circumstances which makes people delay their decision or delay their travel if it's for the short term. Once this is over, it will go back. Where we live now and the results we had and the way we see utilization for short term in Q2 and Q3, starting Q3, it has improved, and we can see

Speaker #3: The pressure we have is just based on the condition that we live with right now, and I don't think this will be forever. There has to be an end to it.

Speaker #3: Once that is over, things are good for us. Business in Saudi is doing well regarding the demand. On leasing, and the traffic of individual travelers or corporate travelers within Saudi will improve.

Speaker #3: So we can see the future as much more stable. But, as I want to say, we are only under some circumstances which make people delay their decision or delay their travel if it's for the short term.

Speaker #3: Once this is over, it will go back. Where we live now and the results we had, and the way we see utilization for short term in Q2, in Q3—starting Q3—it has improved.

Speaker #3: And we can see much more improvement, so people are getting used to it and getting back to normal life. Once it's there, we are ready for it.

Ravish Tatly: Yes

Ravish Tatli: Yes

Fawaz Danish: much more improvement. People are getting used to it and getting back to normal life. Once it's there, we are ready for it. Now we're trying to work on our efficiency and costing, and as Dr. Ravish has said, we sell the cars that we don't need, but we can induct more once we need it. I see, in general, we are in an industry that is much more better than other industries because the demand is still there, whether decision is delayed or movement are delayed, but the business itself, the demand itself in Saudi is still strong for our business.

Speaker #3: And now we're trying to work on our efficiency and costing. As Dr. Ravish just said, we sell the cars that we don't need, but we can induct more once we need them.

Speaker #3: So I see in general, we are in an industry that is much better than other industries because the demand is still there. Whether decisions are delayed or movements are delayed, the business itself—the demand itself in Saudi—is still strong for our business.

Speaker #1: Thank you. We'll take the next question from Hikmat Salahi. Please unmute yourself.

Mirna Maher [Associate Director: Thank you. We'll take the next question from Hikmat Salahi. Please unmute yourself.

Mirna Maher: Thank you. We'll take the next question from Hikmat Salahi. Please unmute yourself.

Speaker #4: Thank you. Thank you, Fawwaz. And thank you, FG, for hosting the call. Very useful. Just one question from my side. If I look at H1 26 operating profit, excluding the $25 million, the year-over-year decline is around 30 percent.

Hikmat Salahi: Salaam alaikum. Thank you. Thank you, Fawaz, and thank you, Ejima, for hosting the call, very useful. Just one question from my side. If I look at H1 2026 operating profit excluding the SAR 25 million, the year-over-year decline is around 30%. If I look at it from an EBITDA perspective, it's around 14%. I just want to understand why is depreciation here giving a more like, worse numbers in that case? Why is the decline mainly coming from depreciation? How did the policy impact the margins in that sense?

[Analyst 1]: Salaam alaikum. Thank you. Thank you, Fawaz, and thank you, Ejima, for hosting the call, very useful. Just one question from my side. If I look at H1 2026 operating profit excluding the SAR 25 million, the year-over-year decline is around 30%. If I look at it from an EBITDA perspective, it's around 14%. I just want to understand why is depreciation here giving a more like, worse numbers in that case? Why is the decline mainly coming from depreciation? How did the policy impact the margins in that sense?

Speaker #4: And if I look at it from an EBITDA perspective, it's around 14 percent. So I just want to understand, why is depreciation here making the numbers look worse in that case?

Speaker #4: Why is the decline mainly coming from depreciation? How did the policy impact the margins in that sense?

Speaker #3: Dr. Ravish, you may say what happened in the first quarter.

Fawaz Danish: Dr. Ravish,

Ravish Tatly: Yes

Ravish Tatli: Yes

Fawaz Danish: you may know what happened in the first quarter.

Speaker #4: Sure, sure. I can explain. See, in the first quarter, the utilization, especially in the full month of March, dropped in the eastern region to the level of 20s, and for the central and the western region, it was in the 40s.

Ravish Tatly: Sure. I can explain. See, in Q1, the utilization, especially in the full month of March, dropped in the eastern region at the level of 20s, and for central and the western region, it was in 40s. That was one reason, like there is a big mismatch, I will say, on the revenue realization versus the fleet and the depreciation, the relevant cost. At that time we were having a quite aggressive depreciation rate. Over and above that, we were having around 1,000 vehicles for the lease customers, and they just requested us to hold the vehicles till the time they will ask us to deliver. So we were not having any revenue, but of course, because it has come into my fleet, I have to start the depreciation on those vehicles. So that was one of the major reason on the depreciation side.

Ravish Tatli: Sure. I can explain. See, in Q1, the utilization, especially in the full month of March, dropped in the eastern region at the level of 20s, and for central and the western region, it was in 40s. That was one reason, like there is a big mismatch, I will say, on the revenue realization versus the fleet and the depreciation, the relevant cost. At that time we were having a quite aggressive depreciation rate. Over and above that, we were having around 1,000 vehicles for the lease customers, and they just requested us to hold the vehicles till the time they will ask us to deliver. So we were not having any revenue, but of course, because it has come into my fleet, I have to start the depreciation on those vehicles. So that was one of the major reason on the depreciation side.

Speaker #4: That was one reason, like, there is a big mismatch, I will say, on the revenue realization versus the fleet and the depreciation—the relevant cost.

Speaker #4: And that time we were having a quite aggressive depreciation rate. In over and above that, we were having the around 1,000 vehicles for the lease customers and their just requested us to hold the vehicles till the time they will ask us to deliver.

Speaker #4: So, we were not having any revenue. But, of course, because it has come into my fleet, I have to start the depreciation on those vehicles.

Speaker #4: So that was one of the major reasons on the depreciation side. Subsequent to that, the depreciation rate, which has adjusted to the level of 2025 and 2024, there is one more factor which has also shown less depreciation, and it is like the type of the vehicles which are coming more and more are low value.

Ravish Tatly: Subsequent to that, the depreciation rate, which has adjusted to the level of 2025 and 2024, there are one more factor which has also shown the less depreciation, and it is like the type of the vehicles which are coming more and more are at low value. So the depreciation rate, which was, say, averaging, say, 1,300 for thousands of vehicles, it is coming in the range of, say, 1,000. So that also has given like, because the type of vehicles, especially the growth which is coming in the last mile companies, they are going more and more cost-conscious, I will say, and they are trying to get the prices which is very low. So the low price can come with the load or the low-cost vehicle only. You cannot continue to take the same type of vehicle and not to pay.

Ravish Tatli: Subsequent to that, the depreciation rate, which has adjusted to the level of 2025 and 2024, there are one more factor which has also shown the less depreciation, and it is like the type of the vehicles which are coming more and more are at low value. So the depreciation rate, which was, say, averaging, say, 1,300 for thousands of vehicles, it is coming in the range of, say, 1,000. So that also has given like, because the type of vehicles, especially the growth which is coming in the last mile companies, they are going more and more cost-conscious, I will say, and they are trying to get the prices which is very low. So the low price can come with the load or the low-cost vehicle only. You cannot continue to take the same type of vehicle and not to pay.

Speaker #4: So the depreciation rate which was say averaging say 1,300 for say thousands of vehicle it is coming in the range of say 1,000. So that also has given like because the type of vehicles like especially the growth which is coming in the last mile companies they are trying they are going more and more cost conscious I will say and they are trying to get the prices which is very low.

Speaker #4: So the low price can come with the load or the low-cost vehicle only. You cannot continue to take the same type of vehicle and not pay.

Speaker #4: So, there is an impact from the type of vehicles. So it's a dollar value impact versus the percentage impact. So, as the dollar value is going down, the impact— the ratio, or the margin ratio that I was referring to— is also changing, Hikmat.

Ravish Tatly: There is an impact of the type of the vehicle, so it is a dollar value impact versus the percentage impact. As the dollar value is going down, the impact, the ratio or the margin ratio which you was referring, it is also changing as much. That is the main reason I will say. I mean, it is

Ravish Tatli: There is an impact of the type of the vehicle, so it is a dollar value impact versus the percentage impact. As the dollar value is going down, the impact, the ratio or the margin ratio which you was referring, it is also changing as much. That is the main reason I will say. I mean, it is

Speaker #4: So that is the main reason, I will say. I mean, it's nothing—yeah, sorry. It's better to look at it from an EBITDA perspective, which will give us a better picture overall.

Hikmat Salahi: Badr, Ravish,

[Analyst 1]: Badr, Ravish,

Ravish Tatly: Yeah

Ravish Tatli: Yeah

Hikmat Salahi: to look at it. Yeah, sorry. Better to look at it from an EBITDA will give us a better picture on the overall

[Analyst 1]: to look at it. Yeah, sorry. Better to look at it from an EBITDA will give us a better picture on the overall

Speaker #4: Yeah, you're right.

Speaker #3: Performance, let's say.

Ravish Tatly: Yeah, you are right.

Ravish Tatli: Yeah, you are right.

Hikmat Salahi: performance, let's say. Just a follow-up regarding the

[Analyst 1]: performance, let's say. Just a follow-up regarding the

Speaker #4: Okay, I'll put it this way, Hikmat. If you break down both the quarters and then look at the EBITDA, you'll see the EBITDA margin is different.

Ravish Tatly: Basically, if you will try to see, I'll put it this way, Hikmat. If you will break both the quarters and then see the EBITDA, you will see the EBITDA margin is different. It will show the improvement in Q1 versus Q2. Of course, it is not at the same level. The reason is like, see, if I'm not getting the revenue, so it becomes very, the gap will be widening because the realization

Ravish Tatli: Basically, if you will try to see, I'll put it this way, Hikmat. If you will break both the quarters and then see the EBITDA, you will see the EBITDA margin is different. It will show the improvement in Q1 versus Q2. Of course, it is not at the same level. The reason is like, see, if I'm not getting the revenue, so it becomes very, the gap will be widening because the realization

Speaker #4: It will show the improvement in Q1 versus Q2. Of course it is not at the same level. So the reason is like see, if I am not getting the revenue, so it becomes very the gap is will be widening.

Speaker #4: Because the realization is not there, your vehicle—so revenue is not there. So it is directly the hit which is going into the revenue is impacting your EBITDA.

Hikmat Salahi: Okay

[Analyst 1]: Okay

Ravish Tatly: is not there, your vehicle. So revenue is not there. So it is directly the hit which is going into the revenue is impacting your EBITDA. That is the main reason.

Ravish Tatli: is not there, your vehicle. So revenue is not there. So it is directly the hit which is going into the revenue is impacting your EBITDA. That is the main reason.

Speaker #4: That is the main reason. So, overall, it's the utilization versus the realization.

Hikmat Salahi: Okay.

[Analyst 1]: Okay.

Ravish Tatly: So it's overall the utilization versus the realization.

Ravish Tatli: So it's overall the utilization versus the realization.

Speaker #3: Okay, thank you, Ravish. Just regarding the slight drop that we have seen across the purchase price recovering and your efforts to sell cars that are at low utilization or have technically no utilization: are you still able to optimize the IRR on those vehicles? Like, are you making a similar 10 to 12 percent IRR on those, or have you compromised a bit on the IRR to, let's say, optimize overall?

Hikmat Salahi: Okay. Thank you, Ravish. Just regarding the, given the slight drop that we have seen across the purchase price recovering and your efforts to sell cars that are at low utilization or have technically no utilization, are you still able to optimize the IRR on those vehicles like you are making similar, the 10% to 12% IRR on those, or you are a bit compromised on the IRR to, let's say

[Analyst 1]: Okay. Thank you, Ravish. Just regarding the, given the slight drop that we have seen across the purchase price recovering and your efforts to sell cars that are at low utilization or have technically no utilization, are you still able to optimize the IRR on those vehicles like you are making similar, the 10% to 12% IRR on those, or you are a bit compromised on the IRR to, let's say

Ravish Tatly: See-

Ravish Tatli: See-

Hikmat Salahi: optimize overall?

[Analyst 1]: optimize overall?

Speaker #4: See, if I take Q1 as an exception, then my IRR is not compromised. I'm still able to get an IRR of 12 percent.

Ravish Tatly: Well, if I will take the Q1 as an exceptional, then my IRR is not compromised. I am still able to get the IRR of 12%. Because Q1 was totally different because in that cycle, for those three months, my average revenue was very low. So that has impacted because that was like more of, you can say, the sale price of the vehicle was bad. I was not getting the rental and the lease revenue because vehicles were idling. So for those three months, whatever loss of revenue I have, that has directly hitting to the IRR percentage. But if I will exclude that and if I will say that that was like something or it was a nightmare we should not repeat, then inshallah, my IRR will remain in the range of 12% plus.

Ravish Tatli: Well, if I will take the Q1 as an exceptional, then my IRR is not compromised. I am still able to get the IRR of 12%. Because Q1 was totally different because in that cycle, for those three months, my average revenue was very low. So that has impacted because that was like more of, you can say, the sale price of the vehicle was bad. I was not getting the rental and the lease revenue because vehicles were idling. So for those three months, whatever loss of revenue I have, that has directly hitting to the IRR percentage. But if I will exclude that and if I will say that that was like something or it was a nightmare we should not repeat, then inshallah, my IRR will remain in the range of 12% plus.

Speaker #4: Because Q1 was totally different. In that cycle, for those three months, my average revenue was very low. So that has impacted, because that was more of—you can say—the sale price of the vehicle was bad.

Speaker #4: I was not getting the rental and the lease revenue because vehicles were idling. So for those three months, whatever loss of revenue I have, that has directly hit the IRR percentage.

Speaker #4: But if I exclude that, and if I say that was like something—or it was a nightmare we should not repeat—then inshallah my IRR will remain in the range of 12 percent plus.

Speaker #3: Okay, Hikmat, if I want to say, in our line of business, it's not a real judgment when you judge quarter to quarter, especially with the situation that we're having in our area.

Fawaz Danish: Okay, Hikmat.

Hikmat Salahi: Oh, okay.

[Analyst 1]: Oh, okay.

Fawaz Danish: If I want to say, in our line of business, it is not a real judgment when you judge quarter to a quarter, especially with the situation that we are having in our area. Our IRR used to be always good double digits as usual. We see that our business model will continue to do that in the future. Looking at 2027, 2028, 2029 with the strategy that we have started to implement this year, it is just that we live in a situation where it is not normal. So if it goes down in a quarter and up in another quarter, we should look at the whole year together, which we can tell you our IRR will be always stable, good double digits as usual, Inshallah. So we cannot judge a quarter to be a normal life for us or a normal of doing business. No.

Speaker #3: Our IRR used to always be good, double digits as usual, and we see that our business model will continue to do that in the future.

Speaker #3: Looking at 2027, 2028, and 2029 with the strategy that we have started to implement this year, it's just that we live in a situation where it is not normal.

Speaker #3: So if it goes down in a quarter and up in another quarter, we should look at the whole year together, which we can tell you, our IRR will always be stable, good double digits as usual, inshallah.

Speaker #3: So we cannot judge a quarter to be a normal life for us or a normal way of doing business. No, it should be at the end of the year—you look at the whole year together. And what happened this year, I tell you the truth, nobody expected what's going on to continue for almost now four or five months.

Fawaz Danish: It should be by end of the year, you look at the whole year together and what happened in this year. To tell you the truth, nobody expected what is going on to continue for almost now four, five months. There will be an end to it, and I think we get back much stronger, Inshallah, after that.

Speaker #3: But there will be an end to it, and I think we will come back much stronger, inshallah, after that.

Speaker #4: Okay, very clear. Best of luck for the coming quarters. Thank you, Ravish. Thank you.

Hikmat Salahi: Okay. Very clear. Thank you, Fawaz. Best of luck for the coming quarters. Thank you, Ravish. Thank you.

[Analyst 1]: Okay. Very clear. Thank you, Fawaz. Best of luck for the coming quarters. Thank you, Ravish. Thank you.

Speaker #2: Thank you.

Ravish Tatly: Thank you.

Ravish Tatli: Thank you.

Speaker #1: Thank you. The next question is: Can you please quantify the impact of the adjusted depreciation? How much should COGS be under the previous depreciation policy?

Mirna Maher [Associate Director: Thank you. The next question is, can you please quantify the impact of the adjusted depreciation? How much should COGS be under the previous depreciation policy?

Mirna Maher: Thank you. The next question is, can you please quantify the impact of the adjusted depreciation? How much should COGS be under the previous depreciation policy?

Speaker #3: Again, let me just correct this, Dr. Ravish. There is no—

Fawaz Danish: Again, let me just correct this, Dr. Ravish. There is no

Speaker #2: Yes, sir.

Speaker #3: Previously, we had a policy and now we have a different policy. The policy did not change; I just want to emphasize this.

Ravish Tatly: Yes, sir.

Ravish Tatli: Yes, sir.

Fawaz Danish: previous policy and now we have a different policy. The policy is the policy did not change. I just want to emphasize on this. Dr. Ravish can tell you

Speaker #3: And Dr. Ravish can tell you. The reassessment that we have done, based by a third party, based on the real resale value we have and expected future, which has really impacted the number of the depreciation—that’s what we can talk about. And in general, we're going back to the same level of 2025–2024.

Ravish Tatly: Yes

Ravish Tatli: Yes

Fawaz Danish: the reassessment that we have done by a third party based on the real resale value we have and expected future, which has really impacted the number of the depreciation. That is what we can talk about. In general, we are going back to the same level of 2025, 2024. You can add to this, Dr. Ravish, because I do not want people to get confused that there is a policy change. There is no policy change.

Speaker #3: You can add to this, Dr. Ravish, because I don't want people to get confused that there is a policy change. There is no policy change.

Speaker #3: The policy on depreciation is the same. I still say this because some of our guests talk about a change in policy. There is no change in policy.

Ravish Tatly: Absolutely.

Ravish Tatli: Absolutely.

Fawaz Danish: The policy of depreciation is the same. Because I still say this and some of our guests talk about change in policy. There is no change in policy.

Speaker #4: Actually, what we do every year is reassess the residual value—average residual value—and the same exercise was done in November for the year 2026.

Ravish Tatly: See, actually what we have, every year we reassess the residual value, average residual value, and the same exercise was done in November for the year 2026. That time, our decision was not made that we are moving from the hybrid insurance policy to the 100% comprehensive. Now, what does it mean? Because if I am moving, I have to factor that part that my residual value will get adjusted as my residual value will be changing because the total loss will be capped at certain percentage and it will not be the lower which comes in the actual. Because I am paying the extra premium. So the insurance rate, sorry, the depreciation rate is being restated or it is being taken the same level of the rate what it was in 2024 and 2025.

Ravish Tatli: See, actually what we have, every year we reassess the residual value, average residual value, and the same exercise was done in November for the year 2026. That time, our decision was not made that we are moving from the hybrid insurance policy to the 100% comprehensive. Now, what does it mean? Because if I am moving, I have to factor that part that my residual value will get adjusted as my residual value will be changing because the total loss will be capped at certain percentage and it will not be the lower which comes in the actual. Because I am paying the extra premium. So the insurance rate, sorry, the depreciation rate is being restated or it is being taken the same level of the rate what it was in 2024 and 2025.

Speaker #4: But at that time, our decision was not made that we are moving from the hybrid insurance policy to the 100 percent comprehensive. Now, what does it mean?

Speaker #4: Because if I am moving, I have to factor in that my residual value will get adjusted, as my residual value will be changing. The total loss will be capped at a certain percentage, and it will not be the lower amount which comes in the actual calculation, actually.

Speaker #4: So, is that because I'm paying the extra premium, the depreciation rate is being restated, or is it being taken at the same level as the rate it was in 2024 and 2025?

Speaker #4: So it is more of a change in estimate, which is a regular exercise, and as most of ours earlier mentioned, all these exercises have been done by a third party for years with us, and the same thing is being done now.

Ravish Tatly: So it is more of change in estimate, which is a regular exercise and as Mr. Fawaz earlier mentioned, that all this exercise is being done by third party for years with us and the same thing is being done. That is the only thing and the only reason it looks different in Q1 versus Q2 because the factor of the insurance policy change is being taken care in this year's depreciation rate, which was not done because everything was not being executed that time. That is the only reason.

Ravish Tatli: So it is more of change in estimate, which is a regular exercise and as Mr. Fawaz earlier mentioned, that all this exercise is being done by third party for years with us and the same thing is being done. That is the only thing and the only reason it looks different in Q1 versus Q2 because the factor of the insurance policy change is being taken care in this year's depreciation rate, which was not done because everything was not being executed that time. That is the only reason.

Speaker #4: So that's the only thing, and the only reason it looks different in the Q1 versus Q2 is because the factor of the insurance policy change is being taken care of in this year's depreciation rate, which was not done because everything was not being executed at that time.

Speaker #4: That's the only reason.

Speaker #1: Thank you. The next question is: how does the lower purchase price of Chinese vehicle brands make up for the weaker resale prices?

Mirna Maher [Associate Director: Thank you. The next question is, does the lower purchase price of Chinese vehicles brand make up for the weaker resale prices?

Mirna Maher: Thank you. The next question is, does the lower purchase price of Chinese vehicles brand make up for the weaker resale prices?

Speaker #3: If you are talking about Chinese vehicles with us, we don't have much. We didn't sell much. And if you're talking about the whole market, oh yes, whoever is selling those vehicles in the market, especially if it was from our peers and our competitors in the market, it has affected the whole market resale value.

Fawaz Danish: If you are talking about a Chinese vehicle with us, we do not have much. We did not sell much. If you are talking about the whole market, oh yes. Whoever is selling those vehicle in the market, especially if it was from our peers and our competitors in the market, it has affected the whole market resale value because it is yet not getting the resale value that it should have, and it takes years to happen. People always ask me, by the way, "What is your opinion about Chinese vehicle?" I would say, as we have seen years ago when Korean vehicles came to the market, it was not accepted. Now it is at the level of Japanese vehicle in terms of quality and in terms of resale value. The Chinese vehicle in the market, it needs some time, but definitely their market share is getting bigger.

Speaker #3: Because it is yet not getting the resale value that it should have, and it takes years to happen. You people always ask me, by the way, what's your opinion about Chinese vehicles?

Speaker #3: I would say, as we have seen years ago, when Korean vehicles came to the market, they were not accepted. Now, they are at the level of Japanese vehicles.

Speaker #3: In terms of quality and in terms of resale value, the Chinese vehicle in the market needs some time, but definitely their market share is getting bigger.

Speaker #3: They're selling more and more, especially to retail or individuals. And for the fleet or car rental, they will be buying in the future, no doubt.

Fawaz Danish: They are selling more and more, especially to the retail or individuals. For the fleet or car rental, they will be buying in the future, no doubt, because we cannot ignore Chinese vehicle in the market. What we did, we are just minimizing maximum during these days until the resale value comes in a good shape, until we verify exactly what are the brands from Chinese vehicles that will fetch a good resale value, that has a better quality, that has a dealership who can always provide the maintenance and spare parts. You have more than 30 brands in the market. So you cannot judge it all as Chinese vehicles. There are good ones, there are half and half, there are bad ones. So the Chinese vehicle will be there in the market.

Speaker #3: Because we cannot ignore Chinese vehicles in the market. What we did—we are just minimizing, as much as possible, during these days until resale value comes in good shape, until we verify exactly which of the brands from Chinese vehicles will fit a good resale value, that have better quality, and that have a dealership who can always provide the maintenance and spare parts.

Speaker #3: You have more than 30 brands in the market, so you cannot judge them all as Chinese vehicles. There are good ones. There are have and have.

Speaker #3: There are bad ones. So, the Chinese vehicle will be there in the market. It is affecting the resale value of all vehicles, definitely, once it's dumped into the market.

Fawaz Danish: It is affecting resale value of all vehicles, definitely, once it is dumped to the market, but that will take another 3 to 4 years. I guess Chinese vehicles will be much more stable in resale value. But if you talk about us in Budget, we did not sell much because we did not have much anyway.

Speaker #3: But that will take another three to four years. I guess Chinese vehicles will be much more stable in resale value. But if you talk about us in budget, we didn't sell much because we didn't have much anyway.

Speaker #1: Thank you. The next question is: Does the full insurance cover increase the recovery ratio on used car sales only?

Mirna Maher [Associate Director: Thank you. The next question is, does the full insurance cover increase the recovery ratio on used car sales only?

Mirna Maher: Thank you. The next question is, does the full insurance cover increase the recovery ratio on used car sales only?

Speaker #3: Yes, I can tell you it's not to increase. Dr. Ravish, go ahead because of it.

Fawaz Danish: Yes, I continue. It is not to increase. Dr. Ravish, go ahead because it-

Speaker #2: No, no, no.

Speaker #3: Resale value—it's a recovery for total loss vehicles. That's on one side. Go ahead, Dr. Ravish.

Ravish Tatly: No, you are

Ravish Tatli: No, you are

Fawaz Danish: resale value. It is a recovery for a total loss vehicle. That is on one side. Go ahead, Dr. Ravish.

Speaker #4: Yeah, no, no, exactly. You said that. What we are referring to is, like, any vehicle which will become a total loss and it will go as a total loss. Then the recovery ratio will come from the insurance.

Ravish Tatly: Yeah. No, exactly, you said that. What we are referring is like any vehicle which will become total loss, and it will go for as a total loss, then the recovery ratio will come from the insurance. Otherwise, if it is a regular sale, it will remain as it is. Whatever realization will come.

Ravish Tatli: Yeah. No, exactly, you said that. What we are referring is like any vehicle which will become total loss, and it will go for as a total loss, then the recovery ratio will come from the insurance. Otherwise, if it is a regular sale, it will remain as it is. Whatever realization will come.

Speaker #4: Otherwise, if it's a regular sale, it will remain as it is—whatever realization will come.

Speaker #3: But in the 2025 policy, we have a mix of policies—some loss vehicle, some total loss vehicle. We used to take the hit because we're not covering it 100 percent.

Fawaz Danish: But in 2025 policy, we have a mix of policies.

Ravish Tatly: Yes, hybrid.

Ravish Tatli: Yes, hybrid.

Fawaz Danish: Some total loss vehicle, we used to take the hit because we are not covering it 100%, so we are not paying much. In 2026, all our cars are fully comprehensively insured. So whatever total loss we have, we are getting a recovery. So we are not selling it as is, as a total loss, as junk. We are getting back a recovery. In conclusion, I can say that whatever extra cost we are having that appears as a premium for the insurance comprehensive, we are getting it offsetted on the other side by getting the value of our total loss vehicles. I wouldn't say 100% up or down here and there, but that's as a conclusion for everybody to understand.

Speaker #3: So, we are not paying much. In 2026, all our cars are fully comprehensively insured. So,

Speaker #1: So whatever total loss we have, we are getting a recovery. So we are not selling it as is, as a total loss or as junk. We are getting back a recovery in.

Speaker #1: In conclusion , I can say that . Whatever extra cost we're having that appears as a premium for the insurance comprehensive , we are getting it Offsetted on the other side , by getting the value of our total loss vehicle .

Speaker #1: I wouldn't say 100% up or down here and there, but that's just a conclusion for everybody to understand.

Speaker #2: Thank you. The next question is: We've seen some competitors sign long-term rental contracts with food delivery companies. Why haven't we seen Budget participate in similar contracts?

Mirna Maher [Associate Director: Thank you. The next question is, we've seen some competitors sign long-term rental contracts with food delivery companies. Why haven't we seen Budget participate in similar contracts? Is this mainly due to the lower margins in this segment?

Mirna Maher: Thank you. The next question is, we've seen some competitors sign long-term rental contracts with food delivery companies. Why haven't we seen Budget participate in similar contracts? Is this mainly due to the lower margins in this segment?

Speaker #2: Is this mainly due to the lower margins in this segment?

Speaker #1: We do have it , ma'am . We do have it . And we are one of the biggest in the market . It's just that as as a strategy , we have we do not announce each and every deal .

Fawaz Danish: We do have it, Ma'am. We do have it, and we are one of the biggest in the market. It's just that as a strategy we have, we do not announce each and every deal we sign. Maybe some other competitors, wherever they sign a deal, we think this is our day-to-day business. From where we are getting these revenues and the increase in the business, considering the last mile delivery is one of the biggest growing demand in the market. I don't have any data, but I think if we are not number one, we are number two, but most likely we are number one in dealing with these businesses, and we do have it. But we show the results, and we don't announce each and every deal we have, because that's a regular weekly, I would say, contracts that we see or monthly contracts.

Speaker #1: We sign Maybe some other competitors , whatever they sign a deal , we think this is our day to day business from where we are getting these revenues and the increase in the business , considering the last mile delivery is one of the biggest growing demand in the market I don't have any data , but I think we are .

Speaker #1: If we are not number one, we are number two. But most likely, we are number one in dealing with these businesses.

Speaker #1: And we do . We do have it , but we we show the results and we don't announce each and every deal we have because that's a regular weekly , I would say , contracts that we see or monthly contracts .

Speaker #1: So we don't want to just say we signed that contract. We signed, but the results are there. And definitely, we are in that business.

Fawaz Danish: We don't want just to say we signed that contract. But the results are there, and definitely we are in that business.

Speaker #2: Thank you . The next question is we understand that you don't comment on the share price . However , the entire car rental sector has seen a very sharp decline in valuations , with some companies now trading at a p e multiple of around 8 to 10 times from management's perspective , do these valuations reflect the fundamental or structural change in the car rental industry Or do you believe the market is overestimating the challenges that are currently facing the sector

Mirna Maher [Associate Director: Thank you. The next question is, we understand that you do not comment on the share price. However, the entire car rental sector has seen a very sharp decline in valuations, with some companies now trading at a P/E multiple of around 8 to 10 times. From management's perspective, do these valuations reflect a fundamental or structural change in the car rental industry? Or do you believe the market is overestimating the challenges that are currently facing the sector?

Mirna Maher: Thank you. The next question is, we understand that you do not comment on the share price. However, the entire car rental sector has seen a very sharp decline in valuations, with some companies now trading at a P/E multiple of around 8 to 10 times. From management's perspective, do these valuations reflect a fundamental or structural change in the car rental industry? Or do you believe the market is overestimating the challenges that are currently facing the sector?

Speaker #1: I would say my personal opinion I agree . 100% that it's it's not valued at the right price . And I don't see , as I said , all this because of a situation we have .

Fawaz Danish: I would say my personal opinion. I agree 100% that it is not valued at the right price, and I do not see. As I said, all this because of a situation we have. It is not something, I would say, based on real industry problem. No. It is because of what is happening around us. So market share price, I do not think it is fair on a personal level for many companies, not only for our company or our industry. This is why we can see that the market is not reading. I am not talking now about a certain sector, but if you ask me, I can see that a lot of opportunities in the whole Saudi stock market are coming because fundamentally, there are many businesses, they will do good, they are still doing good, but the share market price is different.

Speaker #1: It's not something I would say based on real industry problem . No , it is because of what's happening . Around us . So market share price , I don't think it is fair on a personal level for many companies , not only for our company or our industry .

Speaker #1: And this is why we can see that the market is not reading . I'm not talking now about a certain sector , but if you ask me , I can see that a lot of opportunities in this whole Saudi stock market are coming because fundamentally , there are many businesses they will do good .

Speaker #1: They're still doing good . But the share market price is different . That goes back to the analyst . You guys and people who can really talk about this issue from our side on a personal level , definitely .

Fawaz Danish: That goes back to the analyst, to you guys and people who can really talk about this issue. From our side, on a personal level, definitely, I would see that. Sometimes we have seen, I think our share price has come down to the equity price or even less than that, and even for some of our peers in the market. Dr. Ravish, would you like to add something on that?

Speaker #1: I would say that sometimes we have seen, I think, our share price has come down to the equity price or even less than that.

Speaker #1: And even for some of our peers in the market—Dr. Ravish, would you like to add something on that?

Speaker #3: No . Yeah . I mean , see , the only thing which I can say is like , yes , maybe marketing overreacting on the multiples and the price on the shares in general for the industry , because things will improve .

Ravish Tatly: No. The only thing which I can say is yes, maybe marketing overreacting on the multiples and the price on the shares in general for the industry, because things will improve, and when things are back, everything will be normal. So you will be back to the similar situation what we were having till last year, I will say. Now, coming to the particular company, if they are unable to perform well due to their own problem or the false commitment if they have made in past, so that should not impact the market sentiments, ideally. It can be discounted for only those companies which have done that, but not for everyone. So things will improve. That is what I believe. As I said, it looks more to me like overreaction. If the multiples are coming down, currently the price and everything is. I do not think it is a structural change.

Ravish Tatli: No. The only thing which I can say is yes, maybe marketing overreacting on the multiples and the price on the shares in general for the industry, because things will improve, and when things are back, everything will be normal. So you will be back to the similar situation what we were having till last year, I will say. Now, coming to the particular company, if they are unable to perform well due to their own problem or the false commitment if they have made in past, so that should not impact the market sentiments, ideally. It can be discounted for only those companies which have done that, but not for everyone.

Speaker #3: And when things are back, everything will be normal. So you will be back to a similar situation to what we were having till last year.

Speaker #3: I will say now, coming to the particular company, if they are unable to perform well due to their own problem or the false commitment, if they have made in past.

Speaker #3: So that that should not impact the market Market sentiments . Ideally , it can be discounted for only those companies which are which have done that , but not for everyone .

Speaker #3: So things things will improve . That's what I believe . And as I said , like it looks more to me like overreaction .

Ravish Tatli: So things will improve. That is what I believe. As I said, it looks more to me like overreaction. If the multiples are coming down, currently the price and everything is. I do not think it is a structural change. It is a temporary cyclic.

Speaker #3: If the multiples are coming down like they are currently—like the price and everything is—I don't think it's a structural change. It's a temporary, cyclical one.

Ravish Tatly: It is a temporary cyclic.

Speaker #2: Thank you. We'll take the next question from the line of Jonathan. Please unmute yourself.

Mirna Maher [Associate Director: Thank you. We will take the next question from the line of Jonathan. Please unmute yourself.

Mirna Maher: Thank you. We will take the next question from the line of Jonathan. Please unmute yourself.

Speaker #4: Hi . Thank you very much . Congratulations , guys , for a wonderful set of results . Really happy with it . Just a quick follow up question .

[Analyst]: Hi, thank you very much. Congratulations, guys, for a wonderful set of results. We are really happy with it. Just a quick follow-up question. Since you agree that the share price is down, is it trading at a big discount to what you think the fair value is? Why don't you buy back some of your shares? You can easily get the approval. You have a very high free float, so you would not worry about squeezing the free float or the liquidity. I am sure you agree that the share price being at around COVID pandemic levels is very low. Have you considered a decent-sized share buyback? Because you can buy back.

[Analyst 2]: Hi, thank you very much. Congratulations, guys, for a wonderful set of results. We are really happy with it. Just a quick follow-up question. Since you agree that the share price is down, is it trading at a big discount to what you think the fair value is? Why don't you buy back some of your shares? You can easily get the approval. You have a very high free float, so you would not worry about squeezing the free float or the liquidity. I am sure you agree that the share price being at around COVID pandemic levels is very low. Have you considered a decent-sized share buyback? Because you can buy back.

Speaker #4: Since you agree that the share price is down, is it trading at a big discount to what you think the fair value is?

Speaker #4: Why don't you buy back some of your shares? You can easily get the approval. You have a very high free float, so you wouldn't worry about squeezing the free float or the liquidity.

Speaker #4: And I'm sure you agree that the share price being at around COVID pandemic levels is very low. Have you considered a decent-sized share buyback? Because you can buy back. Yeah.

Speaker #1: Yeah . I just want to say hi . It's been some times we haven't heard from you Well , what you're saying is , is , is , is absolutely right .

Fawaz Danish: Jonathan, just.

[Analyst]: Yeah. Sorry.

[Analyst 2]: Yeah. Sorry.

Fawaz Danish: I just want to say hi. It's been some times we haven't heard from you.

[Analyst]: How are you?

[Analyst 2]: How are you?

Fawaz Danish: What you're saying is absolutely right. Let me tell you, we will discuss this with the board. I cannot comment more than this, but do I see it something good to be discussed? Yes. What you have said is something nice, but it goes back to the strategy and what we see in the future and how we're going to deal with it. It is something nice to think about, and we will discuss with the ex-com and the board, Inshallah, in the future.

Speaker #1: But let me tell you , we we will discuss this with the board . I cannot comment more than this , but do I see it As something good to be discussed ?

Speaker #1: Yes . Yeah . What you have said is something nice , but it goes back to . The strategy and what we see in the future and how we're going to deal with it .

Speaker #1: It is something nice to think about, and we will discuss with the ExComm and the Board, inshallah, in the future.

Speaker #4: Okay. Because you could buy back 10% of your shares at the current price, and your leverage would still not be crazy compared to anybody else.

[Analyst]: Okay, because you can buy back 10% of your shares at the current price and your leverage would still not be crazy compared to anybody else.

[Analyst 2]: Okay, because you can buy back 10% of your shares at the current price and your leverage would still not be crazy compared to anybody else.

Speaker #5: Oh yeah. Yeah, very easy. And that's one of—

Fawaz Danish: Oh, yeah.

Speaker #1: The strongest , I would say , position in the market compared to our peers . Our average is very low and we're expecting to , to , to have CapEx in the future .

[Analyst]: Very easy.

[Analyst 2]: Very easy.

Fawaz Danish: That is one of the strongest, I would say, position in the market compared to our peers. Our leverage is very low, and we are expecting to have CapEx in the future and the demand in 2027 that will change the leveraging for us. We have the opportunity also to grow much bigger at a better efficiency and pricing and margin compared to our peers because they are really highly average leverage compared to us.

Speaker #1: And the demand in 27 that will change the leveraging for us . And we have the opportunity also to grow much bigger at a better efficiency and pricing and margin compared to our peers , because they're really highly average .

Speaker #1: A leverage compared to us.

Speaker #4: Okay . Thank you very much . I mean , you can buy them and not necessarily immediately cancel them . You can even sell them back in the market in 2027 when you need the funds .

[Analyst]: Okay. Thank you very much. You can buy them and not necessarily immediately cancel them. You can even sell them back in the market in 2027 when you need the funds as things recover and share prices recover. All right. Thank you very much, Jonathan.

[Analyst 2]: Okay. Thank you very much. You can buy them and not necessarily immediately cancel them. You can even sell them back in the market in 2027 when you need the funds as things recover and share prices recover. All right. Thank you very much, Jonathan.

Speaker #4: As things recover and share prices recover. Right. Thank you very much, gentlemen.

Speaker #5: Thank you. Thank you, Jonathan. Thank you.

Fawaz Danish: Thank you, Jonathan.

Speaker #2: The next question in the chat is: What are your fleet targets for 2026, and across both the rental and leasing segments? Also...

[Analyst]: Thank you.

[Analyst 2]: Thank you.

Mirna Maher [Associate Director: The next question in the chat is, what are your fleet targets for 2026 end across both the rental and leasing segment? Also, what is AutoWorld fleet size today, and how is that business performing?

Mirna Maher: The next question in the chat is, what are your fleet targets for 2026 end across both the rental and leasing segment? Also, what is AutoWorld fleet size today, and how is that business performing?

Speaker #2: What is the World fleet size today and how is that business performing?

Speaker #1: I , I can say our average will be definitely more than 6000 vehicles . It all depends . Now on what's going to happen in the next six months .

Fawaz Danish: I can say our average will be definitely more than 60,000 vehicles. It all depends now on what is going to happen in the next six months. Over 60,000 as a group, it could be up to 65,000, hopefully, but it all depends also on the second half of the year and how our efficiency would work with the demand. We expect it to be in that line. AutoWorld is almost there to come back to normal fleet size, but a mix of both. We always feel better to show you the total fleet size for the group. But by the end of the year, we break it up for all. So 60 is the minimum, 65 or even more, Allahu a'lam, based on the demand and the supply also. Do not forget, there are demands, but there is an issue of the supply.

Speaker #1: Over 6,000 as a group; it could be up to 65,000, hopefully, but it all depends also on the second half of the year and how our efficiency would work with the demand.

Speaker #1: We expect it to be in that line . Auto world is is , is almost there to to come back to normal fleet size .

Speaker #1: But a mix of both. We always feel it's better to show you the total fleet size for the group, but by the end of the year, we break it up for all.

Speaker #1: So 60 is the minimum 65 or even more a . Based on the demand and the supply . Also , don't forget there are demands , but there is an issue of the supply .

Speaker #1: I can tell you I have at least, now, demand for 2,000 vehicles. That has to be delivered in three months. It cannot be.

Fawaz Danish: I can tell you I have at least now demand for 2,000 vehicles that has to be delivered in three months. It cannot be. Because the supply is not there. So God knows how long it takes for us to deliver those vehicles. So it all depends on the supply. Again, this is why I am saying basically the business is there and I am optimistic, but what is happening in the region might delay those deliveries and delay also the revenue if you did not deliver the car.

Speaker #1: It cannot be, because the supply is not there. So God knows how long it takes us to deliver those vehicles. So it all depends on the supply.

Speaker #1: Again, this is why I'm saying, basically, the business is there and I am optimistic. But what's happening in the region might delay those deliveries and cause delays.

Speaker #1: Also, the revenue—if you did not deliver the car...

Speaker #2: Thank you. The next question is: What does the current capital structure look like after Q2? What is the target for debt to equity?

Mirna Maher [Associate Director: Thank you. The next question is, what does the current capital structure look like after Q2? What is the target for debt to equity? Is it expected to increase to fund any potential expansion?

Mirna Maher: Thank you. The next question is, what does the current capital structure look like after Q2? What is the target for debt to equity? Is it expected to increase to fund any potential expansion?

Speaker #2: Is it expected to increase to fund any potential expansion?

Speaker #1: Doctor ravish

Fawaz Danish: Dr. Ravish.

Speaker #3: Yes , sure . See , we are quite comfortable on debt equity . As you have seen the still the debt equity is in the same range .

Ravish Tatly: Yes, sure. See, we are quite comfortable on debt equity. As you have seen, still the debt equity is in the same range what it was. In fact, little bit improved over what it was as of 31 December 2025. Now, yes, we are ready. If any good opportunity will come, we can manage it. Yes, we are looking for that. I am not worried on if it will be blown up. No. It will be still quite manageable even if it will go for a sizable transaction like what we have done for the AutoWorld. We can do it very easily, even if we have to pay, it can be cash or it will be swapping. I do not know if it will come, but it will not impact my debt equity much.

Ravish Tatli: Yes, sure. See, we are quite comfortable on debt equity. As you have seen, still the debt equity is in the same range what it was. In fact, little bit improved over what it was as of 31 December 2025. Now, yes, we are ready. If any good opportunity will come, we can manage it. Yes, we are looking for that. I am not worried on if it will be blown up. No. It will be still quite manageable even if it will go for a sizable transaction like what we have done for the AutoWorld. We can do it very easily, even if we have to pay, it can be cash or it will be swapping. I do not know if it will come, but it will not impact my debt equity much.

Speaker #3: What it was. And in fact, a little bit improved over what it was as of December 31st, 2025. Now, yes, we are ready if any good opportunity will come.

Speaker #3: We can manage it . And yes , we are looking for that . So it will . I'm not worried on like if it will be blown up .

Speaker #3: No , it will be still quite manageable . Even if you go for a sizable transaction like what we have done for the auto world , we can do it very easily , even if we have to pay like it can be cash or it will be swapping .

Speaker #3: I don't know if it will come, but if it does, it will not impact my debt-to-equity much.

Speaker #2: Thank you. The next question is for the remainder of 2026. If you accelerate core sales, do you expect the current vehicle delivery delays to affect your fleet expansion?

Mirna Maher [Associate Director: Thank you. The next question is, for the remainder of 2026, if you accelerate core sales, do you expect the current vehicle delivery delays to affect your fleet expansion?

Mirna Maher: Thank you. The next question is, for the remainder of 2026, if you accelerate core sales, do you expect the current vehicle delivery delays to affect your fleet expansion?

Speaker #3: No . Basically , as I said , we are ready for that situation as and when we need to inject . We are working on that and we will not .

Ravish Tatly: No. Basically, as I said, we are ready for that situation as and when we need to inject. We are working on that, and we are not expecting that problem in our case because we have some kind of agreement, I can say. It will not impact me, Inshallah.

Ravish Tatli: No. Basically, as I said, we are ready for that situation as and when we need to inject. We are working on that, and we are not expecting that problem in our case because we have some kind of agreement, I can say. It will not impact me, Inshallah.

Speaker #3: We are not expecting that problem . In our case because we have some agreement , kind of agreement . I can say . So it will not impact me inshallah

Speaker #2: Can you provide the total fleet size and a breakdown between rental and leasing as of the end of June 2026?

Mirna Maher [Associate Director: Can you provide total fleet size and breakdown between rental and leasing as of end of June 2026?

Mirna Maher: Can you provide total fleet size and breakdown between rental and leasing as of end of June 2026?

Speaker #3: No . We can I can just say one thing . You you will see that the same fleet level is almost same as what it was at the beginning , because as I mentioned earlier , we have some deflating on the short rental , but the fleeting has happened in the leasing .

Ravish Tatly: No. I can just say one thing. You will see that the fleet level is almost same as what it was at the beginning because, as I mentioned earlier, we have some de-fleeting on the short rental, but the fleeting has happened in the leasing, so in totality, it is more or less same. So whatever number we have announced, you can assume that 1,000 less on the short rental and 1,000 plus on the long rental. That's what I can say. But we have not provided the breakup yet.

Ravish Tatli: No. I can just say one thing. You will see that the fleet level is almost same as what it was at the beginning because, as I mentioned earlier, we have some de-fleeting on the short rental, but the fleeting has happened in the leasing, so in totality, it is more or less same. So whatever number we have announced, you can assume that 1,000 less on the short rental and 1,000 plus on the long rental. That's what I can say. But we have not provided the breakup yet.

Speaker #3: So in total, it is more or less the same. So whatever number we have announced, you can assume that's 1,000 less on the short rental and 1,000 more on the long rental.

Speaker #3: That's what I can say, but we have not provided the breakup yet.

Speaker #2: Thank you. The next question is: can you please elaborate on the slowdown in the leasing segment and clients asking to delay receiving vehicles?

Mirna Maher [Associate Director: Thank you. The next question is, can you please elaborate on the slowdown in the leasing segment and clients asking to delay receiving vehicles? How do you see this impacting the pricing in the segment?

Mirna Maher: Thank you. The next question is, can you please elaborate on the slowdown in the leasing segment and clients asking to delay receiving vehicles? How do you see this impacting the pricing in the segment?

Speaker #2: How do you see this impacting the pricing in the segment?

Speaker #3: C. Pricing margin pressure is different. Yes, boss, go ahead.

Ravish Tatly: See, pricing margin pressure is different. Yes, boss, go ahead.

Ravish Tatli: See, pricing margin pressure is different. Yes, boss, go ahead.

Speaker #5: No, no. Go ahead.

Speaker #1: Go ahead, go ahead.

Speaker #5: Okay .

Fawaz Danish: No, no, go ahead, Dr. Ravish. Go ahead.

Speaker #3: See, there is a margin pressure and it's been happening for years, especially whenever there is a new entrant who wants to go for an IPO.

Ravish Tatly: See, there is a margin pressure, and it is happening for years, and especially whenever there is a new entrant who wants to go IPO. Yes, they do that. Now, currently, the delay is happening because people are just going more cautious, I will say, when they want to confirm the order. So maybe Q1 and Q2, when the people have not done the 100% renewal or whatever new leases which were in pipeline, the decision was not taken. Those decisions should come in the coming quarters. It is a timing difference which is being created due to the current situation, I will say. Because people will not stop the business at the end of the day. They have to do the business. They are just looking like when we can say, yeah, things are becoming normal or heading towards the normal, if it is not 100%.

Ravish Tatli: See, there is a margin pressure, and it is happening for years, and especially whenever there is a new entrant who wants to go IPO. Yes, they do that. Now, currently, the delay is happening because people are just going more cautious, I will say, when they want to confirm the order. So maybe Q1 and Q2, when the people have not done the 100% renewal or whatever new leases which were in pipeline, the decision was not taken. Those decisions should come in the coming quarters. It is a timing difference which is being created due to the current situation, I will say. Because people will not stop the business at the end of the day. They have to do the business. They are just looking like when we can say, yeah, things are becoming normal or heading towards the normal, if it is not 100%.

Speaker #3: Yes. They do that, not currently, like the delays happening because people are just being more cautious. I will say, when they order, they want to confirm the order.

Speaker #3: So maybe like , like one Q one and q two . When the people are not done , the 100% renewal or whatever new leases which were in pipeline , the decision was not taken .

Speaker #3: Those decisions should come in the coming quarters. It's a timing difference, which is being created due to the current situation. I will say, because people will not stop the business, at the end of the day they have to do the business.

Speaker #3: They are just looking like when we can say , yeah , things are becoming normal or heading towards the normal . If it is not 100% in the moment , that feeling will come .

Speaker #3: Market sentiments will change and people will start adding more fleet based on their requirements.

Ravish Tatly: The moment that feeling will come, market sentiments will change, and the people will start adding more fleet on their requirement.

Ravish Tatli: The moment that feeling will come, market sentiments will change, and the people will start adding more fleet on their requirement.

Speaker #5: Absolutely

Fawaz Danish: Absolutely.

Speaker #2: And can you give more color on the reason behind the significant growth in the logistics segment, and what are the margins in the segment?

Mirna Maher [Associate Director: Can you give more color on the reason behind the significant growth in the logistics segment, and what are the margins in the segment?

Mirna Maher: Can you give more color on the reason behind the significant growth in the logistics segment, and what are the margins in the segment?

Speaker #1: Well , I would I would start this , but then I would give to the as , I mean , for the logistic business .

Fawaz Danish: Well, I would start this, but then I would give to Dr. Ravish. For the logistics business, and if you consider last mile delivery is part of that, everybody knows the demand is happening in the logistics business and especially in transportation and more of it in the western side of Saudi Arabia because of the situation we have. So there will be much more demand on transportation and between even Saudi and many of the GCC countries. Basically, the logistic is everything. So there is a big demand and a much better high value. Yet with Budget Saudi and the fleet we have, we are providing those trucks to our client, and our client is doing that business in the logistics. So as we see, the demand will be more and more, and for us, the margin is the same.

Speaker #1: And if you consider last mile deliveries , part of that , everybody knows the demand is happening in the logistics business . And especially in transportation and more of it in the western side of Saudi Arabia , because of the situation we have .

Speaker #1: Or there will be much more demand on transportation and and between even Saudi and many of the GCC countries , basically , the logistics is everything .

Speaker #1: So there is a big demand and a much better high value . Yet with budget , Saudi and the fleet , we have , we are providing those trucks to the our client and our client is doing that business in the logistics .

Speaker #1: So as we see the demand will be more and more . And for us , the margin is the same . The margin does not or does not affect because of a high demand here and there .

Fawaz Danish: The margin does not affect because of a high demand here and there, but a high demand will lead to more business and more demand on our vehicles and our trucks. Dr. Ravish, what would you say about it?

Speaker #1: But high demand will lead to more business, and more demand on our vehicles and our trucks. Dr. Ravish, what would you say about it?

Speaker #3: No , absolutely . Both the current situation is like the good part is like , you are this logistic revenue is growing . But at the same time , the problem is like the expenses are also increasing .

Ravish Tatly: No, absolutely, boss. The current situation is like the good part is this logistics revenue is growing, but at the same time the problem is the expenses are also increasing. In fact, not in the same proportion, but it is disproportionate and more expensive. But why we are continuing and will do it because what we have seen by doing that, we have reached to the breakeven in the month of June for that business. If we will be able to continue on that situation when the revenue will continue to grow, we will be crossing the breakeven. This current situation, I think it will support the logistics business. Even when the things will be normal for next quarter and next couple of quarters, I will say, it will continue.

Ravish Tatli: No, absolutely, boss. The current situation is like the good part is this logistics revenue is growing, but at the same time the problem is the expenses are also increasing. In fact, not in the same proportion, but it is disproportionate and more expensive. But why we are continuing and will do it because what we have seen by doing that, we have reached to the breakeven in the month of June for that business. If we will be able to continue on that situation when the revenue will continue to grow, we will be crossing the breakeven. This current situation, I think it will support the logistics business. Even when the things will be normal for next quarter and next couple of quarters, I will say, it will continue.

Speaker #3: In fact , not in the same proportion , but it's disproportionate in more expenses . But why we are continuing and will do it because what we have seen by doing that , we have reached to the break .

Speaker #3: Even in the month of June . For that business . So if we'll be able to continue on that situation , when the revenue will continue to grow , we will be crossing the break .

Speaker #3: Even . And this current situation , I think like it will it will support the logistic business even like when the things will be normal for next quarter , quarter , next quarter , and next couple of quarters .

Speaker #3: I will say it will continue.

Speaker #1: No doubt. One last question, if you have.

Fawaz Danish: No doubt. One last question if you have?

Speaker #2: Sure. The last question I'll take is on residual value. How often is residual value reassessed? Is it on a quarterly basis?

Mirna Maher [Associate Director: Sure. The last question I will take is on residual value. How often is residual value reassessed? Is it on a quarterly basis?

Mirna Maher: Sure. The last question I will take is on residual value. How often is residual value reassessed? Is it on a quarterly basis?

Speaker #3: No, it is done on a yearly basis, annualized. And it is just reassessed to see what happens for the next year—your depreciation policy.

Ravish Tatly: No, it is done yearly basis, annualized. It just reassess because see what happens, for the next year's depreciation policy, you always do it before the year is completed, sometime in November and December. Based on the numbers for October, November, you do it, and you recap or you take the rollover in the first quarter to see that you have taken the number which will be reflecting for the last three years average. So it is on the annual exercise, it is not a quarterly exercise.

Ravish Tatli: No, it is done yearly basis, annualized. It just reassess because see what happens, for the next year's depreciation policy, you always do it before the year is completed, sometime in November and December. Based on the numbers for October, November, you do it, and you recap or you take the rollover in the first quarter to see that you have taken the number which will be reflecting for the last three years average. So it is on the annual exercise, it is not a quarterly exercise.

Speaker #3: You always do it in the before the year is completed sometime in November and December . Based on the upturn numbers for October November , you do it and you recap or you take the what you call rollover in the first quarter to see that you have taken the number , which will be reflecting for the last three years , average .

Speaker #3: So it is on the annual exercise. It is not a quarterly exercise.

Speaker #1: It cannot be quarterly . Victorovich quarterly . It does not give us , I would say , a fair opinion . Again , I say from quarter to quarter , things are changing quickly here in in our area because of what's happening .

Fawaz Danish: It cannot be quarterly, Doctor. If it is quarterly, it does not give, I would say, a fair opinion. Again, I say-

Ravish Tatly: Sure

Ravish Tatli: Sure

Fawaz Danish: From quarter to quarter, things are changing quickly here in our area because of what is happening. So if you judge the first quarter, the second quarter is not the same. Third quarter is never the same. The short of supply or the oversupply. So a whole year is exactly where you can really judge it, and we feel very much comfortable with the reassessment that we have. Again, I said, it is back to the normal 25, 24. So nothing new. Thank you.

Speaker #1: So, if you judge the first quarter, the second quarter is not the same. Third quarter is never the same. The shortage of supply or the oversupply.

Speaker #1: So a whole year is exactly where you can really judge it. And we feel very much comfortable with the reassessment that we have.

Speaker #1: And again , I said it's back to the normal 25 . 24 so nothing new Thank you , thank you very much . Ifg thank you very much for all the audience and attendees , and I hope we have answered many of the questions for our audience .

Mirna Maher [Associate Director: Thank you.

Mirna Maher: Thank you.

Fawaz Danish: Thank you very much. EFG, thank you very much for all the audience and attendees. I hope we have answered many of the questions for our audience.

Speaker #2: Thank you . Thank you , everyone , for joining . And thank you . But management for your time . This concludes today's call .

Mirna Maher [Associate Director: Thank you. Thank you everyone for joining, and thank you, Botros and management for your time. This concludes today's call.

Mirna Maher: Thank you. Thank you everyone for joining, and thank you, Botros and management for your time. This concludes today's call.

Speaker #3: So thank .

Speaker #1: You. Thank you. Thank you all.

Fawaz Danish: Shukran.

Ravish Tatly: Thank you.

Ravish Tatli: Thank you.

Fawaz Danish: Shukran. Thank you. Thank you all.

Ravish Tatly: Thank you. Thank you.

Ravish Tatli: Thank you. Thank you.

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Q2 2026 United International Transportation Co SJSC Earnings Call

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