Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Renaissance Services SAOG (MUS:RNSS, Financial) has successfully appointed a new CFO, Juma Al Khamisi, which is expected to strengthen the financial leadership of the company.
- The company has been awarded new contracts from PDO and Nama, indicating a positive outlook for future revenue streams.
- Renaissance Services SAOG (MUS:RNSS) has been recognized by the Muscat Stock Exchange for full compliance with new ESG reporting requirements, showcasing its commitment to sustainability.
- The company has seen positive results from a pilot project aimed at reducing food waste in Duqm, which is part of its continuous improvement and cost optimization efforts.
- Occupancy rates in the PAC facilities have improved significantly, with four locations reaching high-90-percentile occupancy, contributing positively to the company's performance.
Negative Points
- Duqm village occupancy has been lower than desired, with fluctuations impacting overall performance and requiring strategic adjustments.
- The company is facing challenges in filling additional capacity in some PAC locations, which is affecting overall utilization rates.
- There are ongoing uncertainties regarding tax provisions and the application of tax shields, which could impact financial outcomes.
- The labor law gratuity allowances have led to provisions that may need adjustments, creating potential financial volatility.
- Renaissance Services SAOG (MUS:RNSS) has not yet established a significant presence in Saudi Arabia, with ongoing delays in project mobilization and market entry.
Q & A Highlights
Q: Could you please explain the current situation at Duqm village regarding occupancy during the third quarter and projections for the full year?
A: We ended the third quarter with an average occupancy of 6,000 at Duqm and forecast to end the year at 6,500. Currently, we're at 5,700 due to project transitions. We anticipate an average of 10,200 next year, with potential growth to 14,000-15,000 as new projects mobilize.
Q: What are the major projects contributing to the expected increase in occupancy at Duqm?
A: The primary driver will be the green steel projects, including Jindal Steel and Balkan Steel, which are expected to mobilize more fully by mid-next year. Other projects are also in the pipeline, contributing to the anticipated increase.
Q: Can you provide an update on the PAC facilities and their current utilization?
A: The PAC facilities have expanded capacity, with four locations at high occupancy levels. Overall, we're at about 87% capacity, aiming for 92-93%. Some locations have not yet filled additional capacity, but we expect resolution early next year.
Q: Could you elaborate on the tax shield situation and its impact on future tax payments?
A: The tax shield is expected to cover us until 2025 or 2026, depending on taxable income. We are awaiting tax assessments for 2021 to confirm this. If allowed, it will apply from 2021 for five years, potentially eliminating tax payments during this period.
Q: What is the status of Renaissance Services' operations and opportunities in Saudi Arabia?
A: We've registered a company in Saudi Arabia and are participating in major PPP bids. Our growth strategy includes expanding in Saudi, focusing on long-term facilities management and accommodation solutions. We are open to M&A opportunities to enhance our presence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
