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Rectitude Holdings Ltd Announces Fiscal 2025 First Half Financial Results

1. RECT reported $17.2 million in revenues for H1 2025. 2. Gross profit margins declined from 36.96% to 34.74%. 3. Net income decreased to $0.9 million from $2.1 million YoY. 4. Increased selling and marketing expenses due to branch openings. 5. Future outlook predicts stronger growth in safety and power storage products.

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FAQ

Why Bearish?

Declining net income and gross margins can negatively impact investor sentiment, similar to historical losses seen in companies during rising costs.

How important is it?

The financial results signal shifting operational challenges that investors may view as risky, reducing confidence in RECT's growth outlook.

Why Short Term?

The immediate decline in profits and margins will likely affect the stock in the near term, similar to what occurred with RECT last fiscal year.

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NASDAQ: RECTS&P 500Dow Jones
SINGAPORE, March 27, 2025 (GLOBE NEWSWIRE) -- Rectitude Holdings Ltd (the “Company” or “Rectitude”), a Singapore-based provider of safety equipment and related industrial-grade hardware products, today announced its unaudited financial results for the six months ended September 30, 2024. Fiscal 2025 First Half Financial Results Compared to Fiscal 2024 First Half (amounts in U.S. dollars ($) unless otherwise noted): Revenues for the first six months of fiscal 2025 were $17.2 million. Revenues in Singapore Dollars, increased 7.89% to S$22.1 million, from S$20.5 million in the prior-year period. Revenue growth was driven by a S$5.6 million increase in safety equipment revenues, partially offset by a S$4.0 million decrease in auxiliary product revenues.Gross profit increased to S$7.7 million, from S$7.6 million in the prior year was primarily due to higher sales volumes and improved efficiencies, partially offset by pressures from increased procurement costs arising from customizable products made for customers and newly launched auxiliary products under the DADE brand.Gross profit margin decreased to 34.74% of revenue, from 36.96% of revenue in the prior year as a result of the factors noted above.Selling and marketing expenses in Singapore Dollars, increased by S$0.5 million to S$2.5 million, due to opening of new branches and their associated operating costs.General and administrative expenses in Singapore Dollars, increased by S$0.9 million to S$3.8 million due to increased costs associated with the Company’s initial public offering as well as ongoing public company costs.Net income was $0.9 million, or $0.06 per diluted share, for the fiscal first half ended September 30, 2024. In Singapore Dollars, net income was S$1.1 million, or S$0.08 per diluted share, for the fiscal first half ended September 30, 2024, compared to net income of S$2.1 million, or S$0.17 per diluted share, for the fiscal first half ended September 30, 2023.Adjusted EBITDA for the fiscal first half ended September 30, 2024, was $2.4 million. In Singapore Dollars, Adjusted EBITDA decreased slightly to S$3.2 million, compared to S$3.4 million in the prior year period. “The first six months of the fiscal year have marked by continued innovation for the Company as we seek to meet the evolving needs of our customers. As we continue to invest in developing new products, we are opening the door to new markets and an expanded customer relationships,” said Mr. Jian Zhang, Chairman, Chief Executive Officer, and Executive Director at Rectitude. “The tenacity and dedication of all our employees is evident in our continued revenue growth and customer satisfaction. As we look to the future, we are inspired by the opportunities ahead of us and how those affect our total addressable market. Continued investment in the Company, along with increasing our strategic presence across Singapore and Southeast Asia will strengthen our position in the market and enable Rectitude to maximize our shareholder value.” Revenues For the fiscal first half ended September 30, 2024, total revenues were $17.2 million. In Singapore Dollars, revenues were S$22.1 million and S$20.5 for the respective fiscal first half’s ended September 30, 2024 and 2023. The increase was primarily driven by stronger customer demand for safety equipment given the increased construction activity within the Company’s markets, partial offset by a decrease in auxiliary product revenues. Cost of Revenues For the fiscal first half ended September 30, 2024, cost of revenues was $11.2 million. In Singapore Dollars, for the fiscal first half ended September 30, 2024 and 2023, cost of revenues were S$14.4 million and S$12.9 million, respectively. The increase in cost of revenue was consistent with the increase of revenue during the year, however, procurement costs have increased, rising from customizable products made for customers and newly launched auxiliary products embodying the Company’s DADE brand. Gross profit and Gross profit margin Gross profit for the fiscal first half ended September 30, 2024, was $6.0 million, representing 34.74% of operating revenues. In Singapore Dollars, gross profit for the fiscal first half ended September 30, 2024 and 2023 was S$7.7 million and $7.6 million, representing 34.74% and 36.96% of operating revenues, respectively. The increase in gross profit was mainly due to higher sales volumes. The decrease in gross profit margin is mainly due to higher sales volumes offset by pressures from the increase in procurement costs arising from customizable products made for customers and newly launched auxiliary products under the DADE brand. Selling and marketing expenses Selling and marketing expenses primarily included expenses related to advertising and marketing activities and associated costs of our retail branches, which included labor costs, sales commissions and operating lease expenses. For the fiscal first half ended September 30, 2024, selling and marketing expenses were $1.9 million. In Singapore Dollars, for the fiscal first half ended September 30, 2024 and 2023, selling and marketing expenses were S$2.5 million and S$1.9 million respectively. The increase was primarily due to increase in salaries arising from new hires employed to run newly opened branches.  Research and development expenses Research and development expenses primarily consisted of compensation cost to engineering, design and product development employees and software expenses. For the fiscal first half ended September 30, 2024, research and development expenses were $0.04 million. In Singapore Dollars, for the fiscal first half ended September 30, 2024 and 2023, research and development expenses were S$0.05 million and S$0.04 million respectively. The increase was primarily due to continued investment in new products and services to meet emerging customer demand. General and administrative expenses General and administrative expenses consisted primarily of motor vehicle operating expenses, transportation, property maintenance and property tax, allowance for expected credit losses and general administrative expenses such as staff costs, depreciation, legal and professional fees and other miscellaneous administrative expenses. For the fiscal first half ended September 30, 2024, general and administrative expenses were $3.0 million. In Singapore Dollars, for the fiscal first half ended September 30, 2024 and 2023, general and administrative expenses were S$3.8million and S$2.9 million respectively. The increase was mainly due to increased public company costs, including professional fees and compliance costs incurred related to the Company’s listing on NASDAQ. Net Income As a result of the factors described above, net income for the fiscal first half ended September 30, 2024 was approximately $0.9 million. In Singapore Dollars, net income for the fiscal first half ended September 30, 2024 was approximately S$1.1 million, compared to net income of S$2.1 million, for the fiscal first half ended September 30, 2023. Earnings per Share - Basic and Diluted Earnings per basic and diluted share for the fiscal first half ended September 30, 2024 was $0.06. In Singapore Dollars, earnings per basic and diluted share for the fiscal first half ended September 30, 2024 was S$0.08, compared to S$0.17 for the same period of 2023. Adjusted EBITDA The Company also views earnings before interest, taxes, depreciation and amortization, subject to specific adjustments (Adjusted EBITDA) as an important measure of the results of operations. For the fiscal first half ended September 30, 2024, Adjusted EBITDA was $2.4 million. In Singapore dollars, Adjusted EBITDA decreased slightly to S$3.2 million, from S$3.4 million during the same period. The decrease was primarily driven by compliance costs and professional fees incurred related to the Company’s listing on NASDAQ. Outlook Contemplating the Company’s Outlook for the second half of Fiscal Year 2025, Mr. Zhang commented, “We look forward to start the fiscal second half with stronger growth in Rectitude with our Energy and Power Storage Products to increase workplace safety for users. We will focus on growing our revenue as we continue expanding our presence within the Southeast Asian markets we serve. We remain committed to the core principles that have guided our Company throughout its history, setting the foundation for increased growth and returns over the long term.” About Rectitude Holdings Ltd Founded in 1997 in Singapore, Rectitude is principally involved in the provision of safety equipment, encompassing essential items such as personal protective clothing, gloves, safety footwear, personal fall arrest systems, portable fire extinguishers and traffic products. The Company also offers auxiliary products such as industrial hardware tools and electrical hardware required for construction sites. Rectitude’s products and solutions are marketed to a wide array of distributor networks and end markets, both in Singapore and increasingly throughout the Southeast Asian region, including Brunei, Cambodia, Malaysia, Indonesia, and Vietnam. The Company has also posted an earnings presentation to its website which can be found here: https://ir.rectitude.com.sg/presentations/ For more information, please visit the Company’s website: https://ir.rectitude.com.sg. Forward-Looking Statements Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company's proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the Offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the U.S. Securities and Exchange Commission. For investor and media inquiries, please contact: Rectitude Investor Relations Email: ir@rectitude.com.sg Zachary MizenerLambert by LLYCPhone: +1 (313) 309-9500Email: zmizener@lambert.com RECTITUDE HOLDINGS LTDUNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED SEPTEMBER, 30 2023 AND 2024   For the Periods ended September 30,   2023  2024  2024   S$  S$  US$ Revenue  20,483,795   22,099,549   17,223,559 Cost of revenue  (12,912,013)  (14,422,920)  (11,240,683)Gross profit  7,571,782   7,676,629   5,982,876              Selling and marketing expenses  (1,913,781)  (2,461,020)  (1,918,027)Research and development expenses  (48,291)  (51,376)  (40,041)General and administrative expenses  (2,916,668)  (3,821,950)  (2,978,683)Total operating expenses  (4,878,740)  (6,334,346)  (4,936,751)             Income from operations  2,693,042   1,342,283   1,046,125              Other income (expense)            Other income, net  37,187   200,766   156,470 Interest expense  (79,173)  (88,865)  (69,259)Total other income, net  (41,986)  111,901   87,211 Income before income tax  2,651,056   1,454,184   1,133,336 Income tax expense  (553,689)  (337,177)  (262,783)Net income  2,097,367   1,117,007   870,553              Other comprehensive income            Foreign currency translation loss  -   (388,769)  (302,992)Total comprehensive income  2,097,367   728,238   567,561              Weighted average number of ordinary shares            Basic*  12,500,000   13,614,754   13,614,754 Diluted*  12,500,000   13,614,754   13,614,754 Earnings per share            Basic  0.17   0.08   0.06 Diluted  0.17   0.08   0.06   RECTITUDE HOLDINGS LTDCONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2024 AND UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2024   March 31,2024  September 30,2024  September 30,2024   S$  S$  US$ Assets         Current assets         Cash and cash equivalents  3,468,594   3,970,988   3,094,839 Accounts receivable, net  11,508,064   12,745,334   9,933,235 Inventories, net  6,249,895   6,095,351   4,750,488 Deferred initial public offering (“IPO”) costs  1,560,933   —   — Other receivables  497,309   617,646   481,370 Advances to related parties  358,019   413,810   322,508 Total current assets  23,642,814   23,843,129   18,582,440              Non-current assets            Financial instrument  231,293   222,772   173,620 Loan receivables  —   7,057,050   5,500,000 Property, plant and equipment, net  5,811,883   6,233,598   4,858,232 Right-of-use assets – operating leases  4,522,524   4,918,763   3,833,499 Total non-current assets  10,565,700   18,432,183   14,365,351 Total assets  34,208,514   42,275,312   32,947,791              Liabilities and shareholders’ equity            Current liabilities            Bank loans, current portion  598,848   1,057,695   824,328 Finance lease liabilities, current portion  168,192   195,777   152,581 Accounts payable  6,441,094   7,195,709   5,608,066 Operating lease liabilities, current portion  1,240,129   1,250,366   974,488 Other payables  3,058,781   1,068,646   832,860 Provision for income taxes  1,177,119   646,221   503,640 Total current liabilities  12,684,163   11,414,414   8,895,963 Non-current liabilities:            Bank loans, non-current portion  3,070,967   2,864,403   2,232,408 Finance lease liabilities, non-current portion  379,481   657,916   512,755 Operating lease liabilities, non-current portion  3,487,144   4,018,004   3,131,482 Deferred tax liabilities  1,446   1,446   1,127 Total non-current liabilities  6,939,038   7,541,769   5,877,772 Total liabilities  19,623,201   18,956,183   14,773,735 Commitments and contingencies (Note 20)  —   —   — Shareholders’ equity            Ordinary shares, US$0.0001 par value, authorized 500,000,000 shares, issued 12,500,0000 shares outstanding as of March 31, 2024 and issued 14,500,000 shares outstanding as of September 30 2024, respectively*  1,707   1,978   1,542 Additional paid-in capital  3,377,293   11,382,600   8,871,172 Retained earnings  11,206,313   12,323,320   9,604,334 Other comprehensive loss  —   (388,769)  (302,992)Total shareholders’ equity  14,585,313   23,319,129   18,174,056 Total liabilities and shareholders’ equity  34,208,514   42,275,312   32,947,791  RECTITUDE HOLDINGS LTDUNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2024   September 30,2023  September 30,2024  September 30, 2024   S$  S$  US$ Cash flows from operating activities         Net income  2,097,367   1,117,007   870,553              Adjustments to reconcile net income to net cash provided by/(used in) operating activities            Depreciation of property, plant and equipment  269,095   289,103   225,316 Amortization of right-of-use assets  415,364   791,120   616,569 Operating lease modifications  (7,025)  (40,525)  (31,584)Bad debts write-off  28,542   —   — Gain on disposal of property, plant and equipment  (5,000)  (957)  (746)Allowance for inventories write-down  110,392   28,214   21,989 Allowance for expected credit losses – third parties  3,304   133,618   104,136 Fair value change in financial instrument  (9,162)  (3,031)  (2,362)             Changes in operating assets and liabilities            Accounts receivable, net  1,314,885   (1,370,888)  (1,068,419)Other receivables  (109,147)  (120,337)  (93,786)Advances to related parties  (56,959)  (55,791)  (43,481)Inventories  (274,165)  126,330   98,457 Accounts payable  (73,743)  754,615   588,119 Other payables  309,327   (1,990,135)  (1,551,037)Finance lease liabilities – interest portion of lease payment  (16,782)  (19,015)  (14,820)Operating lease liabilities  (321,309)  (605,737)  (472,089)Income tax payable  65,913   (530,898)  (413,760)Net cash provided by/(used in) operating activities  3,740,897   (1,497,307)  (1,166,945)             Cash flows from investing activities:            Purchases of property, plant and equipment  (178,424)  (298,761)  (232,843)Proceeds from disposal of property, plant and equipment  5,000   1,000   779 Disbursement of loan to third party  —   (7,057,050)  (5,500,000)Net cash used in investing activities  (173,424)  (7,354,811)  (5,732,064)             Cash flows from financing activities:            Proceeds from common shares issued for cash  —   9,189,294   7,161,791 Advances from /(repayment to) shareholders, net  (122,767)  —   — Deferred IPO expenses  (241,690)  —   — Dividends paid  (2,000,000)  —   — Repayments of bank loans  (191,611)  252,283   196,620 Payments for finance lease liabilities – principal portion  (83,175)  (87,065)  (67,855)Net cash (used in)/provided by financing activities  (2,639,243)  9,354,512   7,290,556 Net changes in cash and cash equivalents  928,230   502,394   391,547 Cash and cash equivalents at beginning of the period  2,432,557   3,468,594   2,703,292 Cash and cash equivalents at end of the period  3,360,787   3,970,988   3,094,839              Supplement disclosures of cash flow information            Income taxes paid  (487,776)  (868,075)  (676,545)Interest paid  (79,173)  (88,865)  (69,259)

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