- Record-breaking first quarter revenues $2.2 BillionThis is an 8.9% increase on the 42.0 percent in last year
- Record-breaking net profit for the first quarter $119.8 millionThis is an increase in 13.7 percent over last year’s 191.2 percent
- Dividends from patronage accrued for shareholders $135.6 millionThis is an increase in 24.4 percent, on top last year’s 104.1 percent.
- Ranked No. 1 in its category on Entrepreneur’s 2022 Annual Franchise 500®
OAK BROOK, Ill., May 18, 2022/PRNewswire/ — Ace Hardware Corporation”Ace”Oder the “Company”Today, ) reported record-breaking first quarter 2022 revenues $2.2 BillionAn increase in $181.8 Million8.9 percent for the first quarter of 2021. Net income was $119.8 millionA rise in $14.4 millionThis will occur in the first quarter of 2021. The net income growth includes: $21.4 MillionProfit on the sale Gainesville, Georgia retail support center (“RSC”). This gain is not included in the quarter’s net income. $98.4 MillionA decrease of $7.0 MillionIt will begin in the first quarter 2021.
“Our first quarter increases in revenue and income brings our two-year stacked growth to nearly 51 percent and 205 percent, respectively,” John VenhuizenPresident & Chief Executive Officer. “Revenue growth from the 54 new stores we added in the first quarter was real and incremental. The remainder of the first quarter revenue growth, however, was not as it was the result of ongoing inflation.”
According to data shared by 3,500 Ace retailers in the United States, there was an increase of 1.4 percent in U.S. retail sales during the first quarter 2022. A 10.0% increase in average tickets was driven by a retail price inflation rate estimated at 9.5%. The same-store transactions declined 7.8 percent.
Revenues
Consolidated Revenues at the Quarter End April 2, 2022 totaled $2.2 Billion. The wholesale total revenues were $2.1 billionA rise in $187.9 MillionIt was 10.1% higher than the first quarter of last year. It was 10.1% higher than the previous quarter. The greatest gains were in lawn and garden, outside power equipment, and plumbing. From wholesale merchandise revenues to the activation of new domestic shops January 2021Through March 2022Contributed $57.3 millionIn the first quarter of 2022, incremental revenues exceeded wholesale merchandise revenues. $11.9 MillionDomestic stores that had canceled their memberships during the first quarter saw a decrease in revenues. Domestic stores that sell wholesale merchandise comparable to them saw their revenues increase. $136.0 MillionFor the quarter. This was due to 13.0% wholesale price inflation. Ace International Holdings Ltd., which is a subsidiary of Company, saw a rise in sales. $10.3 MillionAce Wholesale Holdings LLC reported a decline in wholesale revenue compared to the first quarter of 2021. $13.8 MillionWholesale revenues will increase starting in the first quarter of 2021
Retail revenues for the quarter were $156.6 MillionA decrease in $6.1 Million3.7 percent in comparison to the previous year’s first quarter. Ace Retail Holdings LLC (Retail revenues)”ARH”) were $153.0 MillionIn the first quarter 2022 there was a decrease $4.1 Million2.6% in the second quarter of 2021. The Westlake Ace Hardware”Westlake”The sales at ) chain fell by 5.7 percent, while Great Lakes Ace Hardware (“GLA”The same-store sales of ) chain saw a 6.4% decrease in the quarter. GLA opened new stores, while Westlake had two. $5.0 MillionThe increase in incremental revenues partially offsets a decrease in same store sales during the first quarter 2022. GLA and Westlake had 210 stores at the end of the first quarter 2022, compared to 209 stores at 209 that time. Ace Ecommerce Holdings LLC’s retail revenues were $3.6 MillionIn the first quarter of 2022 there was a decrease $2.0 million– or 35.7 percent, in the first quarter 2021.
Ace opened 50 new domestic storefronts in the first quarter of 2022, and closed eleven others. The Company had 4,790 domestic shops at the end of the first quarter 2022. This was 110 more than in the first quarter of 2021. Ace International opened 54 new stores in 2022, while 11 were closed. This brings the total number of worldwide Ace International stores to 5,626 by the end of the third quarter of 2022.
Gross Profit
Wholesale gross profit for the three months ended April 2, 2022Was $262.0 millionAn increase in $18.4millionThe first quarter of 2021. The wholesale gross margin percentage for the first quarter 2022 was 12.7 %, compared to 13.0 % in 2021’s first half. An increase in LIFO expense was responsible for the decrease in wholesale margin percentage. This was due to higher vendor prices due to inflation and a decrease in vendor funds.
Retail gross profit for the three months ended April 2, 2022Was $73.0 MillionA decrease in $3.1 MillionThe first quarter of 2021. Retail gross margin percentage was 46.6% of retail revenues in 2022’s first quarter, a slight decrease from 46.8% in 2021’s first quarter. Retail gross margin percentage has declined due to product mix changes, and the liquidation of personal protective equipment. ARH’s wholesale product acquisition cost is the retail gross profit. ARH’s acquisition costs do not include a markup.
Other Expenses
Wholesalers face increased operating costs $15.8 MillionIt was 10.9 Percent in the first quarter of 2021. The increased warehouse labor costs are due to the increased headcount for the spring selling season. Wholesale operating expenses as a percentage of wholesale revenues remained stable at 7.8 % for the first quarter of 2022 and 2021.
Retail operating expenses increased $6.1 Million9.9 percent in the first quarter of 2021. This was due to an increase in store payroll and expenses related new stores that were opened 2021. Retail operating expenses increased from 37.9 to 43.3 percent in the first half 2021 to 43.3 percent in the first quarter of 2022.
The Company sold its RSC within the first quarter. Gainesville, GeorgiaGain from $21.7 millionThis is classified as Other income Net.
Balance Sheet and Cash Flow
Receiveables have increased $116.5 millionThe first quarter of 2021 will be the most profitable due to the higher sales volumes.
Inventories rose $216.5 MillionThe intentional accumulation in inventory during the first quarter of 2021 was caused by supplier shortages and an increase at Ace owners’ fill rates.
The long-term debt (which includes current maturities) has declined $4.8 MillionComparable to first quarter 2021. The end of the first quarter 2022 saw the lowest level of long-term debt. $121.9 MillionOutstanding on the revolving loans facility $37.6 millionOutstanding Westlake credit facility $32.9 MillionPreviously-retailers owe it.
About Ace Hardware
Ace Hardware is the world’s largest retailer-owned hardware cooperative with more than 5,600 hardware stores in 65 countries. Headquartered in Oak Brook, Ill.Ace and its subsidiaries manage large networks of distribution centres in the U.S.A., and have distribution capabilities. Ningbo (China); Santa Catarina, Mexico; Colon, Panama; Dubai, United Arab Emirates. Ace has been an integral part in local communities around the globe since 1924. It is also known as the home of the helpful hardware men. For more information, visit acehardware.com or newsroom.acehardware.com.
Contacts:
Shareholders’/Investors’ Inquiries:
William Guzik, Executive Vice president and Chief Financial Officer & chief risk officer
630-990-3325, [email protected]
Media Inquiries
Jeff GoodingVice President, Consumer Marketing
630-990-3600, [email protected]
ACE HARDWARE COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited in Millions) | |||||
Three Months to the End | |||||
April 2, | April 3, | ||||
2022 | 2021 | ||||
(13 Weeks) | (13 Weeks) | ||||
Revenues: | |||||
Wholesale revenues | $ 2,057.0 | $ 1,869.1 | |||
Retail revenues | 156.6 | 162.7 | |||
Total revenues | 2,213.6 | 2,031.8 | |||
Revenues cost | |||||
Wholesale cost of revenues | 1,795.0 | 1,625.5 | |||
Retail cost of revenues | 83.6 | 86.6 | |||
Total cost of revenues | 1,878.6 | 1,712.1 | |||
Gross profit | |||||
Wholesale gross profit | 262.0 | 243.6 | |||
Retail gross profit | 73.0 | 76.1 | |||
Total gross profit | 335.0 | 319.7 | |||
Wholesale operating expenses | |||||
Distribution operations expenses | 61.5 | 54.4 | |||
Selling, general and administrative expenses | 57.2 | 52.6 | |||
Retailer success and development expenses | 42.7 | 38.6 | |||
Retail operating expenses | 67.8 | 61.7 | |||
Retail pre-opening expenses | 0.2 | 0.6 | |||
Total operating expenses | 229.4 | 207.9 | |||
Operating income | 105.6 | 111.8 | |||
Interest expense | (4.0) | (4.0) | |||
Interest income | 1.6 | 1.2 | |||
Other income, net | 21.7 | 0.5 | |||
Income tax expense | (5.1) | (4.1) | |||
Net income | 119.8 | 105.4 | |||
Noncontrolling interest results in a net loss of less than 1%. | (0.3) | (0.1) | |||
Net income attributable to Ace Hardware Corporation | $ 120.1 | $ 105.5 | |||
Patronage distributions accrued | $ 135.6 | $ 109.0 | |||
Patronage distributions accrued for third party retailers | $ 130.9 | $ 106.1 | |||
ACE HARDWARE COMPANY CONSOLIDATED BLANCES SHEETS (In millions, with no share data) | |||||
April 2, | January 1, | April 3, | |||
2022 | 2022 | 2021 | |||
Assets | (Unaudited) | (Audited) | (Unaudited) | ||
Cash and cash equivalents | $ 47.5 | $ 37.6 | $ 37.4 | ||
Marketable securities | 56.3 | 58.0 | 59.8 | ||
Receivables net allowances for doubtful account of $5.8, $4.3, or $6.1 | 853.6 | 533.6 | 737.1 | ||
Inventories | 1,520.0 | 1,224.3 | 1,303.5 | ||
Prepaid expenses and other current assets | 68.4 | 63.9 | 62.1 | ||
Total current assets | 2,545.8 | 1,917.4 | 2,199.9 | ||
Net property and equipment | 453.7 | 453.4 | 433.1 | ||
Net operating lease right of use assets | 493.4 | 497.3 | 485.4 | ||
Finance lease right of use assets net | 73.9 | 68.1 | 35.9 | ||
Goodwill and other intangible assets are net | 99.1 | 99.5 | 100.8 | ||
Other assets | 118.3 | 105.7 | 119.1 | ||
Total assets | $ 3,784.2 | $ 3,141.4 | $ 3,374.2 | ||
Liabilities & Equity | |||||
Current maturities of long-term debt | $ 50.1 | $ 17.1 | $ 41.5 | ||
Accounts payable | 1,586.1 | 1,095.2 | 1,407.9 | ||
Patronage distributions payable in cash | 174.4 | 120.6 | 138.9 | ||
Patronage refund certificate available | 27.2 | 27.2 | 26.5 | ||
Current operating lease liabilities | 68.0 | 64.3 | 65.7 | ||
Current finance lease liabilities | 12.3 | 10.9 | 5.4 | ||
Accrued expenses | 184.4 | 282.9 | 145.9 | ||
Total current liabilities | 2,102.5 | 1,618.2 | 1,831.8 | ||
Long-term debt | 142.3 | 18.6 | 155.7 | ||
Patronage refund certificate available | 103.5 | 92.8 | 102.6 | ||
Operating lease obligations on a long-term basis | 448.4 | 456.3 | 441.0 | ||
Long-term financing leases | 60.7 | 56.4 | 30.0 | ||
Other long-term liabilities | 94.2 | 91.0 | 76.0 | ||
Total liabilities | 2,951.6 | 2,333.3 | 2,637.1 | ||
Member Retailers’ Equity | |||||
$1,000 par value of Class-A voting stock, 10,000 shares authorized. 2,680 and 2,681 are issued and outstanding, respectively. | 2.7 | 2.7 | 2.7 | ||
$100 par value Class C non-voting common stock, 100 par value, 10,000,000 shares authorized. 5,672,347 and 5,838,265 were issued and are still outstanding. | 567.2 | 583.8 | 492.2 | ||
For patronage distributions, Class C common stock, non-voting, $100 par worth issuable retailers, 1,752,589 share, 1,209,000.075 share and 1,779.506 share. | 175.2 | 120.9 | 178.0 | ||
Contributed capital | 19.0 | 19.1 | 18.9 | ||
Retained earnings | 58.1 | 68.9 | 31.6 | ||
Accumulated other comprehensive (loss -) income | (1.2) | 1.0 | 1.3 | ||
Equity attributable to Ace member retailers | 821.0 | 796.4 | 724.7 | ||
Equity attributable to non-controlling interests | 11.6 | 11.7 | 12.4 | ||
Total equity | 832.6 | 808.1 | 737.1 | ||
Total liabilities and equity | $ 3,784.2 | $ 3,141.4 | $ 3,374.2 | ||
ACE HARDWARE COMPANY CONSOLIDATE STATEMENTS ABOUT CASH FLLOWS (Unaudited in Millions) | |||
Three Months to the End | |||
April 2, | April 3, | ||
2022 | 2021 | ||
(13 Weeks) | (13 Weeks) | ||
Operational Activities | |||
Net income | $ 119.8 | $ 105.4 | |
Adjustments to reconcile net income to net cash used in operating activities | |||
Depreciation and amortization | 19.0 | 17.4 | |
Amortization of deferred financing costs | 0.1 | 0.1 | |
Gain on the disposal of assets, net | (21.8) | (0.1) | |
Provision for doubtful accounts | 1.1 | 1.0 | |
Other, net | 3.8 | 1.8 | |
Changes in operating liabilities or assets are exempted of acquisition effects | |||
Receivables | (346.7) | (241.5) | |
Inventories | (295.7) | (168.9) | |
Other current assets | (4.6) | (6.9) | |
Other long-term assets | (3.4) | 4.0 | |
Accounts payable and accrued expenses | 419.5 | 222.6 | |
Other long-term liabilities | 3.3 | 2.4 | |
Deferred taxes | (1.0) | 0.1 | |
Net cash used in operating activities | (106.6) | (62.6) | |
Investing Activities | |||
Purchases of investment securities | (3.3) | (22.2) | |
Proceeds from sale of investment securities | 1.8 | 7.4 | |
Purchases of property and equipment | (25.5) | (25.4) | |
Cash paid for acquired businesses, net of cash received | – | (2.6) | |
Increase in notes receivable, net | (3.6) | (4.6) | |
Proceeds from sale of assets | 27.2 | – | |
Other, net | (0.7) | (0.2) | |
Net cash used in investing activities | (4.1) | (47.6) | |
Financing Activities | |||
Net borrowings under revolving lines of credit | 154.6 | 141.8 | |
Principal payments on long-term debt | (3.6) | (2.6) | |
Payments of patronage refund certificates | (25.9) | (16.9) | |
Repurchase of stock | (1.1) | (2.3) | |
Purchase of noncontrolling interests | (0.2) | (0.1) | |
Other, net | (3.2) | (1.2) | |
Net cash provided by financing activities | 120.6 | 118.7 | |
Increase in cash and cash equivalents | 9.9 | 8.5 | |
Cash and cash equivalents at start of period | 37.6 | 28.9 | |
Cash and cash equivalents available at the finish | $ 47.5 | $ 37.4 | |
Additional disclosure of cash flow information: | |||
Interest paid | $ 6.6 | $ 7.1 | |
Income taxes paid | $ 0.3 | $ 0.3 | |
SOURCE Ace Hardware Corporation
