Equipment House CEO optimistic about Q4 on new projects, cost control

Faisal Al-Atawi, CEO of Scientific and Medical Equipment House Co. (Equipment House)

Faisal Al-Atawi, CEO of Scientific and Medical Equipment House Co. (Equipment House), said the company is optimistic about the fourth quarter, supported by a growing contribution from new projects, continued cost discipline. This is in addition to strong operating cash flow, which reached approximately SAR 87 million in the first nine months of 2026.

The company aims to close the year with improved profitability and build on that performance to achieve sustainable growth in 2027, Al-Atawi told Argaam.

On the impact of geopolitical tensions in the region on the cost of importing medical devices and supplies and delays in shipments, the CEO said the company's exposure to these developments is limited given the nature of its business model.

More than 80% of the company's Q3 revenue came from operations, maintenance, catering, and contracting services carried out within Saudi Arabia, he noted.

In the supply segment, the company closely monitors shipping plans with its global suppliers and ensures the availability of spare parts for critical equipment to prevent any disruption to maintenance contracts.

Equipment House has been monitoring developments closely since the tensions began and regularly reassessing their impact on project costs, the CEO noted, adding that the company disclosed the relevant effects in its financial statements. He also highlighted the improvement in profit margins during Q3.

Regarding the financial results, Al-Atawi said Q3 performance reflects the company's focus on revenue quality and profitability rather than revenue size alone. Profit growth was supported by cost discipline, with selling and marketing expenses declining by approximately SAR 2.6 million and general and administrative expenses falling by around SAR 1 million.

The company also focused on higher-margin contracts, lifting its gross profit margin to 16.3% from 14.3%, while operating profit nearly doubled to SAR 13.4 million.

Al-Atawi added that revenue growth at subsidiaries and a revision to the policy for calculating spare parts provisions, in line with accounting standards and regulatory requirements, supported the results. This came despite the completion of several projects, higher Zakat provisions, and a decline in other miscellaneous revenue.

On the decline in revenue from the operations, maintenance, and contracting segment following the completion and handover of several projects, the CEO said contract expirations and handovers on schedule are normal in a business model based on fixed-term contracts. The key, he stressed, is to continuously replenish the contract portfolio.

The company launched several new projects during the year, most notably maintenance at King Salman General Hospital and King Abdulaziz University in Jeddah, in addition to other projects in medical operations and contracting.

These projects have so far offset part of the decline, as they remain in the preparation and gradual ramp-up stages. Their revenue contribution is expected to increase over the coming quarters as they reach full operating capacity, Al-Atawi said.

Regarding revenue expectations for Q4, he described the outlook as positive and promising, with no deviations expected from the company's estimated budget, which was prepared at the beginning of the year, approved by the board, and periodically updated to reflect the contribution of new projects.

On the performance of subsidiaries, the CEO said the company assesses their results on a year-to-date rather than quarterly basis due to the seasonality of their sales, particularly food products, which are affected by holiday periods and Ramadan.

The subsidiaries' performance improved in the nine months ended Sept. 30, 2026, compared with the same period last year, resulting in better profit margins. Food Supply House Co. led the improvement, followed by Girgas Co.

Their activities span wholesale and retail trading in food products, medicines and cosmetics, as well as maintenance services and spare parts for air-conditioning and refrigeration equipment. The portfolio also includes Nabd, the company's medical arm, which specializes in manufacturing cardiac catheters and is the only manufacturer of such products in Saudi Arabia and the Middle East.

The company closely monitors the performance of these subsidiaries and expects further improvement in the coming periods.

On the revision of the policy for calculating provisions for slow-moving spare parts for medical devices and equipment, Al-Atawi said the change was a regulatory requirement that had to be implemented and was consistent with accounting standards and the requirements of the Ministry of Commerce and the National Unified Procurement Company (NUPCO).

He explained that the company's supply agreements with NUPCO require it to retain spare parts for more than 10 years, meaning these parts are not considered slow-moving given the contractual obligations. The impact reflected in Q3 resulted from recalculating the provision in accordance with the revised policy.

Future profitability in the segment will depend on the volume and mix of supply contracts. The company is working to strengthen this business by securing high-quality agencies that offer greater added value and higher margins.

Regarding demand for medical devices and equipment, as well as operations and maintenance services in the Saudi market, the CEO said demand for these services remains strong and sustainable, supported by the healthcare transformation program under Saudi Vision 2030, the expansion of health clusters, and greater private-sector participation in service delivery.

This transformation directly supports the company's business model, as operators seek a single trusted partner capable of providing medical and non-medical operations, maintenance, catering, and supply services —in which the company has operated for more than 45 years.

The existing contract portfolio provides the company with clear revenue visibility for several years ahead. It also continues to participate in new tenders and will announce any material contract awards in due course, Al-Atawi added.

He noted that the company looks forward to the approval of the extraordinary general meeting on Nov. 11 for the company's share buyback program, which reflects its confidence in its value and future prospects.