Renaissance Services SAOG (RNSS) Earnings Call Transcript
August 12, 2026
Earnings Call Speaker Segments
And welcome to the Renaissance Services SAOG Investor Briefing for the Q2 2026 results. And thank you so much for your interest and for joining us. As a way of introduction, I am Andrew Dawson, the CEO of Renaissance Services; and with me is Juma Al-Khamisi, the CFO for the company. We trust you've had access to the company results and to our Chairman, Mr. Samir Fancy's, detailed Chairman's statement that I think very well summarizes what we've faced in what can be said to be a challenging Q2. I'll just have a few remarks to that Chairman's statement to help set the scene before we open the floor for questions. I think the themes for Q2 were very much as we discussed at the end of Q1 and just the mix of business and the ongoing mix of business between our accommodation solutions and our contract services business. Q2 saw RSVD, so Duqm occupancy stability return after the challenges we faced with the regional crisis there and the strikes that we incurred in March. So that really has taken until late April, early May to stabilize. Outside of this, we see stable ongoing demand around the levels with the ongoing delays in the announcement of new major projects in Duqm. Last quarter, we spoke a lot about the permanent accommodation villages that we operate across the oil fields. Now we continue to see challenges there with [ a two speed ] demand between the North and the South fields. And given the current economic conditions, the ongoing challenges in contractor compliance to the worker welfare requirements and hence the occupancy within the PAC villages. We have seen some improvement late into Q2, and we can see the trend continuing in Q3 that we're now in with a return of occupancy in the PACs. We're continuing to work very closely with our client. There's a number of initiatives, and we are starting to see the impact of those. Actually, in Q2, the PAC occupancy was slightly lower than Q1. And as I said, towards the end of Q2 and now into Q3, we are seeing some better performance there. In the contract services business, so we continue to face some challenges. We've discussed the direct impact of [ Port of Salalah ] in Q1. So we continue to face the ongoing challenges as with many in terms of the supply chain disruptions and the impact on shipping, logistics, insurance costs. And then operationally, I think our teams are doing a good job in terms of offsetting as much as possible the impact in our raw material costs, whether it be in our spare parts through menu reengineering, through scope adjustments, through negotiations with our clients to try and offset as much of that as possible. I think from a business development and a sales perspective, we continue to see some good progress. I think year-to-date now, we've signed 17 new contracts, more than $13 million in new contract value with a strong pipeline and some made up of a whole mix of projects. So we're continuing to see good growth there. And at the same time, we've talked about the implementation of our new target operating model. We're making good progress there. We're seeing some positive impacts in the company in terms of the reorganization of the company, the rationalization of our overheads and really moving our resources downstream to be much closer to our clients. So hopefully, that gives a little flavor to the business on top of our Chairman's statement. And with that, without further [ ado ], we'll open the floor for questions. We'll do our best. Hopefully, we can provide you with as much detail as possible, and we certainly welcome all the questions we can.
Thank you, Andrew. Just a normal disclaimer on the main purpose of this forum, which is thankfully for MSX for arranging us to give insights on the performance of the first half of the year. So the aim of this is to shed light on the performance as announced in the different forum. And we will come to any questions, and we will be able to handle the questions in Arabic and English. So whoever wants -- preferred to ask the question in Arabic will be handled in Arabic. So we will start with the first question.
I just had a couple of questions. As you mentioned that the occupancy is now improving and the results are now -- the numbers are now looking good. Do you mean that in the third quarter, the numbers are improving because during the second quarter, we have seen a surge in the top line, but unfortunately, the bottom line was pretty much the same as the first quarter. So even though the increase in top line was not able to generate additional numbers in the profit after tax. So what was the reason during the second quarter? And how are things looking in this third quarter? And finally, if you could give us some guidelines on the occupancy rates, both in Duqm and PACs.
Yes. If I may, just to start the question, the similar results, even though the top line is protected, you are seeing a big impact on the bottom line. And this is again because of our operating mix. So our accommodation solutions generate higher margins. So the decline in occupancy is affecting our bottom line. But however, it's still solid. So we see that occupancy is coming up by the end of the quarter. So the increase in the occupancy is not yet material in the results, but we are expecting in quarter three and four will be better as we see from this standpoint. I will leave the floor to Andrew just to elaborate a little bit on that question.
Yes. Thank you for the question. Thanks for that. Just to add a little bit more detail. Actually, the Q2 occupancy in the permanent accommodation contractors villages across the oil fields was slightly lower than in Q1. We hit the lowest actually in May, so right in the middle of the quarter. And since then, we have seen an improvement. I think as we said last quarter, we've been working in detail with our client over a long period of time around some of the core issues. And we've seen some of the results of that partnership and that collaboration flow into improving occupancy from very late in May. So an uptick in June and now into quarter three, we're not back to historical norms of occupancy by any means, but it is certainly trending in the right direction and a lot stronger. I think in May, if I can put a number on it, I think our occupancy or I know our occupancy in the PACs was at 62%. So we're certainly trending well above that now. And that's against, I think, a long-term occupancy we would have spoken about on this call before my time, I think over the last 10 years or more of around 85%. So we're seeing the improvement there. And that's where it was late in the [ quarter ]. And then as Juma has said, we're seeing, and I mentioned in the introduction, we're seeing ongoing growth in our contract services business. As I've spoken about before with our mix of business between accommodation solutions and contract services. Accommodation solutions business, high capital, high return model; our contract services business, low capital, lower margin model. So it takes a lot of volume in our contract services business to offset or contribute the equivalent amount of EBIT continuing the appropriate -- the same amount of profit as our accommodation solutions. And we can see that mix moving around. So we've seen actually a net decline in our revenues from our accommodation solutions, a strong increase in the contract services, but obviously different margins. And what we're starting to see now in Salalah is the return to -- in some way in our accommodation solutions. So hopefully, that explains a little bit why you see the revenue, the impact it has on the profitability and where we've been trending across the first half of the year and kind of where we are now sitting here almost halfway through Q3.
Yes, yes. That explains it. So if I understand it correctly, with the increase in occupancy during the third and the fourth quarter of this year, we should see an uptick in both the top line and the bottom line because the contract services revenue contribution and profit contribution would be there in addition to the already business that's going on.
Exactly right. [indiscernible] So I mean our growth and protection in the top line show the resilience of the business in getting in new contracts, but the margin of the contracting business, as you rightly mentioned, is not as good as the accommodation solution where the impact will be high due to the segment characteristics.
And I mean just to maybe clarify that because we're not here to provide forward guidance. But what -- where we are today compared to where we were in Q2 from an occupancy perspective, we're in a better position. We're certainly in an improved position. The trends are positive. Where that leads to obviously what other headwinds in this current environment we face, we cannot predict. But yes, that's kind of where we are today, and you caught you summarized it well.
Congratulations on your results. And my question is the EBITDA margins have declined approximately from 16% in H1 '25 to 12% in H1 '26. Could you help me understand from where is the compression coming from the lower occupancy versus the input cost inflation? And how much do you expect in the H2?
Okay. I think it was a little bit hard to hear, but I think you were talking about the reduction in the margins in Q1 2025 through to where we currently are. So look, as we were explaining, the major driver of that is the change in the mix of the business between the revenues from the accommodation solutions, which are linked to the occupancy. And that's both in the permanent accommodation of the contractors villages across the oil fields and at our village in Duqm on the wall behind the RSVD, where over that period of time since Q1 2025 to the end of Q2 2026, there has been a decline in the occupancy in both. We just explained, I guess, what's happening in the oil fields. In terms of Duqm, we had a big impact due to the regional crisis in March, so right at the end of Q1, was really flow most of Q2 into making a recovery of the occupancy there. But the occupancy there, on average, where we see the activity at the moment is still sitting below where it was in 2025. There is some ongoing improvements we see in Q3 and Q4 with some smaller project -- new project activity. And we are working very closely with obviously SEZAD and with many of the major investors in Duqm on the future pipeline of projects. But our village occupancy there is highly dependent on the next wave of development in Duqm and those major projects, of which we see really some starting to firm up for 2027 positive and some of the much bigger ones flowing on from that in 2028 and 2029. So from a Duqm perspective, maybe to address that, we do retain our long-term confidence in Duqm, in the story of Duqm in the development and the projects to come. But we certainly face a challenging situation in terms of projects and occupancy in 2026. And we do see some positive trajectory from the pipeline of projects we see coming over the coming years. So that's really what's driving the challenges in the margin. On top of that, yes, we have had an impact since the regional crisis. And we've been tracking very, very closely the change in the prices in our supply chain, benchmarking from what we were paying on the 28 of February this year and what that impact has been. So we've seen a significant impact in the business. However, through our mix of our operational teams, as I said, menu reengineering, changes in scope, adjustments in methodologies, we've seen a good ability to offset a percentage of that. We slightly over 50% of the impact. We're seeing that we have the ability to offset and with some discussions with some clients on pricing adjustments and other adjustments in our contracts. We saw a slight improvement in that in June given the -- where the regional tensions were at. We've seen a further uptick in that in July. So in early Q3, given the recommencement of the [ hostilities ], we hope that sense will prevail and the situation can calm and we can see a slow improvement in that impact will certainly have an impact on the business on top of that change in the mix between accommodation services and services business. Hopefully, that explains.
Yes. Thank you, Andrew. I think the same question also has been raised in the Q&A table. So there's one question similar to what [indiscernible] asked, can we elaborate in the margin. We have answered it twice. I think we heard what asked the same question on the margin and we explained the level of product mix we have, which is impacting the margin. Whatever we are seeing here, our accommodation solutions is still a solid business with a high potential. So we do have the assets ready for occupancy, is actually the fluctuation in the occupancy, which is expected me to come back. The timing issue is still there. Our contracting businesses, which is vary from Hard FM, Soft FM, Waste Management, Catering. So all these are very solid and resilient and pipeline and revenue. So this is basically to the question. A few other questions also, I will take it later. First, there is hand raised from [indiscernible].
Quick one. I have a couple of questions. One is in terms of -- if I understand correctly, you're saying the average occupancy for the first half is 62%, correct?
No, that's not correct. That was the occupancy in May. That was the [ low ] point of occupancy.
Okay. And what was the occupancy in the first half? And...
You're talking about the permanent accommodation of a contract using oil [indiscernible].
Yes, yes. It's correct.
Average occupancy across the first half was around 65%.
65%. And then how is the occupancy right now and versus last year?
The occupancy now compared to last year?
Yes, correct.
I'd have to look back on what the occupancy was compared to last year. We've improved on that occupancy since that point we're tracking about 10 percentage points above that occupancy where we currently are with the efforts, ongoing efforts, obviously. But that's about where we are now.
Just the last year average occupancy was 74%. No, our occupancy is ramping up. So the average for the first half of the year, 6%, but then because of the timing issue. So the ramp [indiscernible] will continue for quarter three and four. So that brings it very close to what is last year if it stays at the same momentum. But as we say, this is very difficult to project. And the aim of this discussion is to just share the highlights of the financial results of the first half rather than digging into forecasts, which might vary from the reality and what we see as of now. So just to give you a flavor on where we stand, but this is not to predict the results for the second half, [indiscernible] we will deviate ourselves from the main reason of this call.
Sure, sure. Two more questions. One is in terms of the revenue mix. What's the accommodation versus contracts in the first half 2026? What's the revenue mix?
Yes, [indiscernible] we are looking to our revenue mix as a whole. However, we're just trying to [ die, to die, just to make it too ]. But we are, look to our -- for our competitive advantages as an [indiscernible] overall company rather than breaking it. It is actually, also a mix -- some of the accommodation have also kept in the [indiscernible] component. So we don't want to enter in segmentation of our top line and the bottom line.
Okay. Okay. And do you think that your gross margin in the second half will be like quite similar to last year or it will be somewhere in between this year -- first half and last year?
Well, second half, we cannot tell from now, but we can see what we have shared in the [indiscernible].
Okay. One more question. I saw that some increase in the borrowings. So what's the purpose of the additional borrowing? And what is your target leverage?
So the increase in the borrowing is mainly the treasury management, if you can see even though we had an increase in our short-term borrowings, the cash position is still solid and strong. So this is just the time management of our treasury management to earn money out of the money which is still there. So sometimes you rather borrow in the short term rather than using your own cash to create the [indiscernible] for the shareholders' benefits. So there is other questions also in Q&A. So we will take it as we go. So what will be the company next major growth driver? Yes. So I will start this, and then I will leave the floor to Andrew to elaborate. Our major growth drivers, one what we said we are working hard on growing the occupancy, which is a quick win if we got this in the short term. In the long term, actually, we are looking for different verticals in the organic growth space, and we have started expanding our products by injecting some hard [ FM ] contracts in our portfolio. In the organic space also we are looking to [indiscernible] opportunities across all our verticals, which is [ very ] from accommodation solutions, hard FM, soft FM, waste management. So we are looking for opportunities also in terms of inorganic growth. And also those opportunities which we are looking for future is either in Oman also outside Oman. We are trying to expand our presence in the GCC countries and the neighboring countries.
Yes, absolutely. I think, look, just for a bit more flavor to what Juma said, we have a very strong sales pipeline. I think if I look at the sales pipeline, we have -- is over $164 million. And on top of that, we have over $400 million of bids as contract value of bids under evaluation. We have -- and that is made up of a whole mix of projects in terms of some are very large, some are smaller. And as Juma has said, diversified across lots of different types of facilities management services, whether it be food services. You mentioned waste management. We've seen some good growth this year. I think we mentioned -- last quarter, I think we might have won two new hard services contracts with the Ministry of Health, since signed another one. And then in our utilities business, we can know the work that we do around utilities with NAMA. So we have a very strong future in the contract services business. And I will say that's both here in Oman, we're very focused, but also in the near region. And we've been working on a number of major project opportunities in countries close to Oman, knowing that one of our, I guess, the DNA of Renaissance is our ability to invest and build, our own and operate and transfer projects over a long period of time. And we have a number of those significant projects in the pipeline both in Oman and in some neighboring countries. Also then we're looking at M&A. And in M&A, again, we're looking both here in Oman and in neighboring countries. And where we're looking for M&A is where it will complement us. So in Oman, where it may be infill to give us a new service line or a new space on the market, a new sector on the market where we're not present. And then again, in the new region in some of the countries which we see strong opportunity for the future of facilities management, growing markets, maturing markets, whether that be in the accommodation services, which we know well or in the contract services business. So we certainly see lots of growth opportunities both in near and medium term. And I think the team is confident we're going to have some good things to announce over the coming months and into 2027. And we really -- as part of, I guess, the challenge that we're facing in Q1 and Q2 is the current mix of business between accommodation services and contract services. And so you could see when we really reach some of these challenges in occupancy, the significant impact that it can have on the company's bottom line performance. The more we diversify, the further we go down our strategy of diversifying our lines of revenue, growing our contract services business so we can more evenly balance our accommodation services business is going to give the company even stronger than the resilience we have today and a much better offset if one part of the company is underperforming compared to historically or in other parts. So that's why we're convinced we're on the right strategy, and we're very focused on going as fast as we can, executing that and diversifying our lines of revenue.
The second question is which is I think we have also answered it and which segment of the company to expand. We have mentioned the segments which we know how to operate. I take a question, ask a question about the level of occupancy in RSVD and Duqm. So we are -- actually we closed the quarter at 22% and now it's ramping up now to close to 25%, which is actually hoping that this will come back. So Andrew, if you can elaborate on the question, which is [indiscernible] specifically [indiscernible].
In terms of the question is about what do we think will drive occupancy in the coming quarters. So occupancies for RSVD is completely reliant on the projects, new projects, small, medium and large within the SEZAD special economic zone for Duqm. So we work closely with SEZAD and then with the various investors will be announced. You see lots of announcements in the press of different projects coming to really understand what they mean, what will happen on the ground, when will it happen on the ground. And I think any of you are familiar and perhaps even more familiar with than myself just being here for one year in terms of some of the delays in some of those projects linked to the -- being certain on gas allocations, being certain on other access to utilities and resources when those projects will come about. So in terms of -- obviously, we have near sight in terms of the rest of this year in what is coming. And there is no new major projects that are going to significantly impact RSVD occupancy this year. There's some smaller projects, and we are seeing some small ramp-up in numbers, but there's certainly nothing game changing. In terms of some more sizable projects for next year, and we're working with certain clients in terms of potential shutdowns at the refinery, some other new projects. There's been the talk for a long time on the various steel and green steel and associated projects in discussion with those companies as they firm up their investments and time lines. But I will say from a -- I think a realistic outlook for now is very much similar types of trading in Duqm at RSVD for the rest of 2026. We do see some improvement in 2027 with some of the projects that we have sight on. But I hate to put an occupancy number on it. It's -- but it is positive. And -- but really, I think the major projects from the line of sight that we have at the moment is really more towards 2028 and 2029 when I think what I call Phase 2 of the development of Duqm we can really see coming about. So hopefully, that gives a little bit more light on Duqm. And we are a bit hesitant to -- we certainly don't want to overcommit because I understand there has been a lot of announcements and then things are about to happen in Duqm and then they don't happen or they're delayed. So as we have certainty, then we're happy to share that certainty. But that's certainly from my perspective, being here for 12 months, I certainly have a much more positive outlook and a high level of confidence on Duqm into 2028 and 2029 than what I would have understood and shared with you six months ago.
I'll take the other question. What is the time line for UAE expansion? And do you [indiscernible] for M&A [indiscernible]. And any deal closure in H2 2026? So I'll take the first part of the question is we do have an operation in UAE and it is actually also impacted because of the inflation, the input cost of the material similar to Oman. That's also a big player elements in our margin. So that operation is continuing. And last year, they was performing well, and we are hoping they will be coming back as the prices stabilize. And that business also looking to another strategic things in UAE and I don't know what is meant by the new [indiscernible] M&A and the expansion. So -- and the other one, any deal closure in H2 2026. So actually, we have multiple opportunities under screening process, under due diligence. So whenever those opportunities are mature at the level which we can disclose, it will be disclosed through the proper protocol through MSX. As of now, we actually -- and probably all of you know that M&A exercises take a long time. Whatever you see it is close to be closed and to be completed might go back to square one. So this is how the M&A is done. But what I can say, we have -- the company invested in the investment team, which was now a proper setup with a very solid pipeline. We are looking to different opportunities within Oman and outside Oman. And when this comes to a level which we can disclose it, we will be disclosing it. And hopefully, we can get something soon as we have closed the last deal in the first quarter of this year. I hope that addressed the question from KP. The other interesting question, so looking beyond the current year's financial performance, what is the single biggest strategic risk that could materially change the company's long-term growth and value creation? And what specific action is the management is taking today to mitigate the risk?
I can -- I think from a single biggest strategic risk, I think from a strong Renaissance, Renaissance is a very resilient company. And part of that is from what we'll be talking about in terms of already the existing mix of business and the long-term contract nature of what it holds. I think the permanent accommodation villages contracted through 2045. The RSVD is a long-term holding. And I think we're seeing positive projects in executing our strategy in terms of growing the contract services business, diversifying the business. And Oman is a very stable home for the company and provides us with a strong platform to see some growth opportunities in the near region as we see the right fit in a sensible way to really help propel the growth of the company. As Juma has spoken, we're looking at M&A as well as organic growth. And I think the stability -- if you look at our contracts, we have many, many contracts with the government, all with major government-backed organizations in Oman. So I really can't see any major risk in terms of the fundamentals. Yes, we obviously face short-term challenges. We've spoken about with the occupancy, with the economic conditions, I think that are driving that in Oman at the moment with the regional crisis. And hopefully, that is for the short term that we're all enduring and doing our best to get through. And what we are doing while we're working on dealing with these and focus on the growth is transforming the organization. We've launched our new business units, so we can be very focused on where we want to grow, be much closer to our clients and have our sales resources are really embedding in those business units closer to the markets, and obviously optimizing the cost base of the company. We've made some really good progress there this year and going through our digital transformation, embracing the new technologies and including AI, which is really helping us unlock efficiencies, new services and things as well. So I can't see a specific strategic risk to really impact us.
Just maybe I'll add to what Andrew mentioned. He covered the entire thing. So basically, what are the risks for any business in our size is how we continue to grow and how to protect the top line and the bottom line going forward. And if you see a list of actions we are being taken and what we have been discussing during this call and, we are strategically addressing. Meanwhile, we are trying to protect the existing businesses with organic growth with close interaction with our key clients to bring the occupancy to the level. Same time, we are growing in the hard FM and soft FM and we're being very strong and maybe we are leading the industries in those areas. We are being investing in these strategies. At the same time, from the balance sheet perspective, we are also exploring different options in organic growth. And our company strength in the liquidity and the balance sheet give us very strong firepower to explore those opportunities and to get the right fit to our businesses. So the question is very good. It required a lot of things to be discussed, but this is the main key line around it. So I'll move to the next question. Can you elaborate on -- so [indiscernible] acquisition has made any meaningful contribution in the second quarter and going forward, what percent of revenue will be contributed. So basically, -- so [indiscernible] size, as we have said earlier, is around 10% of our top line. And the contribution of [ SoA ], as we said earlier, it is actually -- it is a small portion, but the potential to grow is high. So we was expecting that this company will contribute 5% of earnings per share for us. As we see in the first quarter is matching that benchmark and above that. We are expecting also [ SoA ] will contribute further by having other synergy, which we are working on. So it's yet to see the more impact. But the good thing in this actually, we have a focus on [ SoA ] growth. Yes, actually, maybe the timing was unfortunate. [ SoA ] also get impacted because of the inflation cost and the materials, which is immediately after it comes through our books. However, it's actually this problem is cyclical and can be sorted. And our kind of actually operation of two to three years contract, it might be very -- not very easy to reflect this and charge it back to the customers, but this is the cycle. So [ SoA ] is performing well and as expected so far, we are expecting also other growth areas by value addition, which Renaissance can add to [indiscernible]. In terms of the revenue and all the things, all the numbers are embedded for quarter one in our results. And we are looking at again an aggregate of Renaissance's performance in all lines of the P&L. So I think we have addressed all the questions in the Q&A tab. If there is any further questions for other hands raised, so it will come. Those questions give us very good highlights on the businesses. So we'll come for more questions.
I might just wait one minute any other questions?
Any question in Arabic is open to addressed again, I just remind you that the question to be raised in Arabic, we will be addressing in Arabic as well.
Okay. It doesn't seem like there's any more questions. So firstly, thank you for your interest in Renaissance, and thank you for the questions. They really make us think obviously live in the company, with the company every day. So it's a great opportunity for us to engage with you to explain where we're at, what the drivers are and where we're heading. So I would reiterate, we really believe we have a very resilient and strong organization, great opportunities for the future. It's indeed been a challenging first half of the year, as you can see in our results. But we do see lots of positive upside for the future of the organization. We thank you for your interest. Thank you for your investment in the company, and thank you for taking the time to spend with us today. And we wish you well, stay safe, and we look forward to engaging again soon. Thank you.
Thank you, everyone, and thanks also to MSX this forum for us to share lights on our results and looking forward to meet you again in the next quarter and at the year-end as well. Thank you very much.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete Renaissance Services SAOG transcript - plus 252,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to Renaissance Services SAOG earnings transcripts and 252,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.