Message to
Shareholders:
President & CEO

Dear Ace Shareholders,

2025 was a very good year for Ace Hardware. Not because conditions were easy–they weren't–but because the company stayed focused on fundamentals that endure: disciplined growth, prudent capital allocation, strategic consistency, and supporting the success of our owners. When those things are done well, results tend to take care of themselves.

Total revenue eclipsed $10 billion for the first time, finishing at $10.043 billion, a 5.8% increase (4.6% excluding the 53rd week). More importantly, we returned a record $362 million in dividends, producing a 40.2% return on equity for our shareholders. That number matters at Ace because you are not distant nor abstract investors - you are active owners accountable for real businesses and real outcomes in communities who rely upon your service. Management's primary aim remains simple and unwavering: to produce a return on the investment you have in both your stores and in this company, for you are owners of both. When that happens, Ace works the way it was designed to.

Retail fundamentals were modest, yet solid and encouraging:

Those results aren't driven by luck–they are driven by disciplined execution, great people, and a relentless focus on being the most helpful stores on planet earth.

When we perform well, we also gain the privilege of doing more good. In 2025, contributions to the Ace Foundation totaled over $24 million. This work is not peripheral to our mission; it is a direct extension of it. Strong financial performance allows us to show up more fully for our communities, and we consider that one of the most important returns we generate.

Digital continued to be a major growth engine, up 27% for the year. Omni-channel revenue reached $2.6 billion, now a meaningful share of Ace's $24.1 billion in system-wide retail sales.

The takeaway is not that digital is replacing the store–it's that digital is strengthening it. When technology makes a local store more convenient, more visible, and more relevant, everybody wins.

Our owned businesses performed well and added meaningful value to the cooperative:

Behind all of this stands a supply chain that continues to get stronger. We opened our new 1.5 million square-foot Retail Support Center in Kansas City, improving capacity, resilience, and service. Fill rates improved by 102 basis points, and our driver and warehouse associate safety performance was the best in recorded history. That last point deserves special emphasis: results matter, but how we achieve them matters more.

If there is a single lesson from 2025, it's this: boring fundamentals, done consistently well, compound into extraordinary outcomes. We didn't chase fads. We invested where returns were durable. We protected the balance sheet with equity standing strong at $900 million. And we kept our promises to our owners.

Looking ahead, our strategy remains unchanged. We will defend and extend the relevance of the local Ace store. We will invest in supply chain and digital capabilities that make Ace easier to do business with. And we will allocate capital with the same mindset our owners use in their businesses–patient, disciplined, and focused on long-term value.

Thank you to Ace-nation. I consider it one of the highest joys of my life to get to work with such exceptional, hard-working, humble people. Most of all, thank you to our owners for the trust you place in Ace. We never forget who we work for.