Mister Car Wash, Inc. Q1 FY2024 earnings call

• Sales rose 6% to $239 million and adjusted EBITDA climbed 6% to $75 million, with comp store sales up 1%. • Opened 6 new greenfield stores, ending the quarter with 482 locations; added 35,000 UWC members, ending with over 2.1 million members. • Subscription business, making up ~74% of sales, is resilient but offset by a softer retail environment driven by competition, greenfield growth, cannibalization, and pressure on lower-income customers. • Titanium rollout showing progress, with penetration above 20% at quarter end; raised Platinum pricing to $32.99 from $29.99 in most markets to boost premium appeal and incent trade-up to Titanium. • Unlimited Wash Club program has high capture rates, flat core churn, and consistent wash frequency; prioritizing upgrading existing members over new member growth for now. • Appointed Matt Marakovitz as Vice President of Marketing to advance customer acquisition, engagement, loyalty, and subscription efforts. • On track for ~40 new store openings in 2024, with greenfield stores helping densify markets and create a network effect. • Tightly managed expenses, leveraging SG&A to drive strong cash flow and adjusted EBITDA levels.

In the first quarter, sales increased 6% to $239 million. Adjusted EBITDA increased 6% to $75 million. Comp store sales increased 1%. The company opened 6 new greenfield stores and ended the quarter with 482 locations. The subscription business, accounting for about 74% of sales in the first quarter, added 35,000 UWC members and ended the quarter with over 2.1 million members.

• Reiterating full-year guidance ranges previously provided for fiscal 2024. • Completed refinancing of credit agreement, extending debt maturities and increasing liquidity. • Balance sheet remains healthy, with self-funding supporting growth and expansion.

• Retail softness due to increased competition, greenfield growth, cannibalization, and pressure on lower-income customer cohort. • Potential customer churn from price increases, though mostly trading down to more affordable plans with a small number leaving. • Macroeconomic factors affecting new store economics and competition levels.

Q: Can you give some more detail on trends through the quarter? Any quantification on how much the adverse weather shaved off the comp number?

A: John Lai said they never blame missing budget or not hitting numbers on weather, but a soft winter affected Northern climate stores; Jedidiah Gold noted comp store sales were consistent by month, with March slightly above average and momentum carrying into April.

Q: Can you give more detail on membership growth strategy?

A: Jedidiah Gold said there's more focus on trading members up to Titanium, expecting mid-single-digit membership growth this year compared to low double digits last year.

Q: Thoughts on marketing to different demographics given retail softness?

A: John Lai mentioned pivoting to more targeted marketing approaches to drive customer acquisition, with new marketing leadership advancing these efforts.

Q: Timing and scope of pricing changes for Platinum and Titanium?

A: John Lai said promotions were pulled as mix targets were met, with no more discount pressure; Jedidiah Gold noted Titanium is performing better than expected, offsetting retail softness in Q1.

Q: New store economics and maturation?

A: Jedidiah Gold said '22 vintage stores grew 40% in first comp year, with greenfield stores having net investments of ~$2 million, growing from ~$1 million to ~$1.3 million in year 1 and expected to reach ~$2-$2.3 million by year 3.'