ACE HARDWARE REPORTS FIRST QUARTER 2025 RESULTS

— Record first quarter revenues of $2.2 billion, an increase of 4.2 percent

— First quarter net income of $30.3 million

— Accrued patronage dividend to shareholders of $61.6 million

— Ranked #1 in home improvement on Forbes' 2025 Best Customer Service List

— Ranked the #5 best franchise in the world according to Entrepreneur Magazine

Ace Hardware Corporation (“Ace” or the “Company”) today reported first quarter 2025 revenues of $2.2 billion, an increase of $89.4 million, or 4.2 percent, from the first quarter of 2024. Net income was $30.3 million for the first quarter of 2025, a decrease of $16.6 million from the first quarter of 2024. This decrease was largely expected based upon the timing of income earned from vendors as well as planned increases in marketing spend and investments in supply chain infrastructure.

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“A 35 percent increase in our digital business, 0.6 percent same-store-sales growth from stores in the hardware format, and 45 new domestic stores highlighted our record first quarter revenue,” said John Venhuizen, President and CEO.

The approximately 3,900 Ace retailers who share daily retail sales data reported flat U.S. retail same-store-sales during the first quarter of 2025, which was the result of a 1.1 percent increase in average ticket; offset by a 1.1 percent decrease in same-store transactions.

Revenues

Consolidated revenues for the quarter ended March 29, 2025 totaled $2.2 billion. Total wholesale revenues were $2.1 billion, an increase of $75.1 million, or 3.8 percent, as compared to the prior year first quarter. Increases were seen across many departments with lawn and garden, outdoor power equipment and grilling showing the largest gains.

Wholesale merchandise revenues to new domestic Ace stores activated from January 2024 through March 2025 contributed $66.8 million of incremental revenues during the first quarter of 2025, while wholesale merchandise revenues decreased $7.8 million during the first quarter due to domestic Ace stores whose memberships were cancelled. Wholesale merchandise revenues to comparable domestic Ace stores decreased $42.6 million for the quarter. Ace Wholesale Holdings reported a $31.6 million increase in wholesale revenues, or 32.4 percent, from the first quarter of 2024. Increases were seen across all channels with hardware showing the largest gain. Ace International Hardware experienced a $6.0 million decrease in wholesale revenue from the first quarter of 2024 while Ace Services Holdings, which is reported as part of the Company's wholesale business, experienced a $3.3 million increase in revenues from the first quarter of 2024.

Total retail revenues from Ace Retail Holdings (“ARH”) for the quarter were $175.2 million, an increase of $14.3 million, or 8.9 percent, as compared to the prior year first quarter. The Great Lakes Ace Hardware chain experienced a 3.7 percent increase in same-store-sales while the Westlake Ace Hardware chain experienced a 1.2 percent decrease in same-store-sales in the quarter. The new stores opened byARH since the end of 2023 contributed $14.5 million of incremental revenues during the first quarter of 2025. ARH operated 258 stores at the end of the first quarter of 2025 compared to 236 stores at the end of the first quarter of 2024.

Ace added 45 new domestic stores in the first quarter of 2025 and cancelled 12 stores. This brought the Company's total domestic store count to 5,177 at the end of the first quarter of 2025, an increase of 112 stores from the first quarter of 2024.

Gross Profit

Wholesale gross profit for the quarter ended March 29, 2025 was $263.2 million, an increase of $8.9 million from the first quarter of 2024. The wholesale gross margin percentage was 12.8 percent of wholesale revenues in the first quarter of 2025, down slightly from 12.9 percent in the first quarter of 2024, due to the timing of income earned from vendors.

Retail gross profit for the quarter ended March 29, 2025 was $84.0 million, an increase of $8.3 million from the first quarter of 2024. The retail gross margin percentage was 47.9 percent of retail revenues in the first quarter of 2025, up from 47.0 percent in the first quarter of 2024. ForARH, retail gross profit is based on the Company's wholesale acquisition cost of product, not ARH's acquisition cost which includes a markup from the Company.

Expenses and Other

Wholesale operating expenses increased $23.7 million, or 11.7 percent, from the first quarter of 2024. The increase is primarily driven by increased marketing and advertising spending, higher compensation benefit expense and increased Retail Support Center related costs. As a percentage of wholesale revenues, wholesale operating expenses increased to 11.0 percent of wholesale revenues in the first quarter of 2025 from 10.2 percent of wholesale revenues in the first quarter of 2024.

Retail operating expenses increased $8.4 million, or 11.7 percent, from the first quarter of 2024. The increase was driven by expenses incurred related to the new stores added since the end of 2023. Retail operating expenses as a percentage of retail revenue increased to 45.7 percent in the first quarter of 2025 from 44.6 percent in the first quarter of 2024.

Recent tariffs imposed by the U.S. on companies worldwide will increase the Company's cost of goods. The Company intends to pass these increased costs through to its customers and expects that its customers will pass these increased costs through to consumers. At this time, the Company is unable to determine the impact that this will have on the Company's revenues, results of operations and financial condition.

Balance Sheet and Cash Flow

Receivables increased $21.9 million from the first quarter of 2024 due to higher sales volumes.

Inventories increased $95.1 million from the first quarter of 2024 driven by higher sales volumes and ARH new store inventory.

Long-term debt, including current maturities, increased $107.2 million from the first quarter of 2024. At the end of the first quarter of 2025, long-term debt consisted of $446.2 million outstanding on the revolving credit facility, $88.4 million outstanding on theARH credit facility and $53.1 million owed to former retailers.

About Ace Hardware

Ace Hardware is the largest hardware cooperative in the world, serving more than 8,700 locally owned and operated stores around the globe, while providing the best products, services, and operating methods to almost 5,200 Ace retail stores in the United States. Ace Hardware's family of brands includes Ace Hardware, Emery Jensen Distribution, and independent retailers worldwide. Headquartered in Oak Brook, Ill., Ace operates an expansive network of U.S. distribution centers, along with international capabilities in Ningbo, China, and Cuautitlán Izcalli, Mexico. Since 1924, Ace has been a part of local communities, known as the place with the helpful hardware folks. For more information, visit acehardware.com or newsroom.acehardware.com.

Contacts:

Shareholders'/Investors' Inquiries: William Guzik, Executive Vice President, Chief Financial Officer & Chief Risk Officer 630-990-3325, guzik@acehardware.com

Media Inquiries: Jeff Gooding, Vice President, Consumer Marketing 630-990-3600, media@acehardware.com

ACE HARDWARE CORPORATIONCONSOLIDATED STATEMENTS OF INCOME(Unaudited, in millions) Three Months Ended March 29, March 30, 2025 2024 (13 Weeks) (13 Weeks)Revenues:Wholesale revenues $ 2,052.0 $ 1,976.9Retail revenues 175.2 160.9Total revenues 2,227.2 2,137.8Cost of revenues:Wholesale cost of revenues 1,788.8 1,722.6Retail cost of revenues 91.2 85.2Total cost of revenues 1,880.0 1,807.8Gross profit:Wholesale gross profit 263.2 254.3Retail gross profit 84.0 75.7Total gross profit 347.2 330.0Wholesale operating expenses:Distribution operations expenses 72.8 68.9Selling, general and administrative expenses 89.5 84.1Retailer success and development expenses 64.0 49.6Retail operating expenses 80.1 71.7Retail pre-opening expenses 1.2 0.6Total operating expenses 307.6 274.9Operating income 39.6 55.1Interest expense (13.3) (12.2)Interest income 1.8 1.9Other income, net 1.9 2.2Income tax benefit (expense) 0.3 (0.1)Net income 30.3 46.9Less: net loss attributable to noncontrolling interests (0.4) (0.3)Net income attributable to Ace Hardware Corporation $ 30.7 $ 47.2Patronage distributions accrued $ 61.6 $ 76.5Patronage distributions accrued for third party Retailers $ 56.6 $ 72.0
ACE HARDWARE CORPORATIONCONSOLIDATED BALANCE SHEETS(In millions, except share data) March 29, December 28, March 30, 2025 2024 2024Assets (Unaudited) (Audited) (Unaudited)Cash and cash equivalents $ 48.4 $ 36.3 $ 33.6Marketable securities 41.3 42.7 50.0Receivables, net of allowance for doubtful accounts of $11.5, $10.9 and 905.1 727.8 883.2$13.9, respectivelyInventories 1,425.4 1,197.9 1,330.3Prepaid expenses and other current assets 93.6 87.3 75.2Total current assets 2,513.8 2,092.0 2,372.3Property and equipment, net 604.6 594.6 547.3Operating lease right-of-use assets, net 791.2 798.2 653.1Finance lease right-of-use assets, net 176.7 185.7 121.6Goodwill and other intangible assets, net 455.8 455.6 411.6Other assets 174.1 166.7 159.8Total assets $ 4,716.2 $ 4,292.8 $ 4,265.7Liabilities and EquityCurrent maturities of long-term debt $ 110.0 $ 80.6 $ 78.3Accounts payable 1,444.8 1,215.2 1,386.0Patronage distributions payable in cash 160.4 137.2 166.6Patronage refund certificates payable 15.0 15.0 29.0Current operating lease liabilities 118.2 94.4 86.9Current finance lease liabilities 44.9 37.9 26.2Accrued expenses 243.9 313.1 218.0Total current liabilities 2,137.2 1,893.4 1,991.0Long-term debt 477.7 246.5 402.2Patronage refund certificates payable 217.9 205.8 164.1Long-term operating lease liabilities 699.8 728.4 588.7Long-term finance lease liabilities 130.0 145.0 96.6Other long-term liabilities 160.4 151.8 122.3Total liabilities 3,823.0 3,370.9 3,364.9Member Retailers' Equity:Class A voting common stock, $1,000 par value, 10,000 shares 2.6 2.6 2.6authorized, 2,595, 2,586 and 2,616 issued and outstanding,respectivelyClass C nonvoting common stock, $100 par value, 20,000,000 shares 737.3 752.9 708.3authorized, 7,372,647, 7,528,693 and 7,083,302 issued andoutstanding, respectivelyClass C nonvoting common stock, $100 par value, issuable to Retailers 95.7 82.5 108.7for patronage distributions, 957,248, 825,206 and 1,086,986 sharesissuable, respectivelyContributed capital 19.1 19.3 19.2Retained earnings 32.6 58.5 53.3Accumulated other comprehensive (loss) income (1.8) (1.9) 0.1Equity attributable to Ace member retailers 885.5 913.9 892.2Equity attributable to noncontrolling interests 7.7 8.0 8.6Total equity 893.2 921.9 900.8Total liabilities and equity $ 4,716.2 $ 4,292.8 $ 4,265.7
ACE HARDWARE CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited, in millions) Three Months Ended March 29, March 30, 2025 2024 (13 Weeks) (13 Weeks)Operating ActivitiesNet income $ 30.3 $ 46.9Adjustments to reconcile net income to net cash (used in) provided by operating activities:Depreciation and amortization 25.0 24.1Non cash lease expense 11.1 7.3Amortization of deferred financing costs 0.2 0.2Loss on the disposal of assets, net 0.2 -Provision for doubtful accounts 0.9 1.4Other, net 3.2 (1.8)Changes in operating assets and liabilities, exclusive of effect of acquisitions:Receivables (191.8) (221.9)Inventories (226.7) (95.2)Other current assets (6.3) (5.3)Other long-term assets (2.0) (3.5)Accounts payable and accrued expenses 188.1 258.9Other long-term liabilities 8.6 2.7Deferred taxes (0.1) (0.6)Net cash (used in) provided by operating activities (159.3) 13.2Investing ActivitiesPurchases of investment securities (0.3) (6.5)Proceeds from sale of investment securities 2.3 5.5Purchases of property and equipment (33.4) (34.4)Cash paid for acquired businesses, net of cash acquired (1.5) -Increase in notes receivable, net (7.1) (10.7)Other, net (0.1) 0.1Net cash used in investing activities (40.1) (46.0)Financing ActivitiesNet borrowings under revolving lines of credit 257.9 72.3Principal payments on long-term debt (4.9) (4.8)Principal portion of finance lease payments (11.6) (8.3)Payments of patronage refund certificates (28.4) (22.5)Repurchase of stock (2.0) (2.6)Purchase of noncontrolling interests (0.1) (0.2)Other, net 0.6 0.6Net cash provided by financing activities 211.5 34.5Increase in cash and cash equivalents 12.1 1.7Cash and cash equivalents at beginning of period 36.3 31.9Cash and cash equivalents at end of period $ 48.4 $ 33.6Supplemental disclosure of cash flow information:Interest paid $ 14.8 $ 14.0Income taxes paid $ 1.1 $ 0.7

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