Mister Car Wash, Inc. Q1 FY2025 earnings call

• Q1 delivered strong comp store sales growth of 6% and record revenues and adjusted EBITDA (up 9% and 14% respectively). Marked eight consecutive quarters of overall comp growth and first back-to-back positive retail comps in three years. • Industry dynamics: Reprieve to competitive intrusion with fewer new competitor newbuilds; viewed as opportunity to extend leadership. • Strategic pillars: Expanding footprint – opened 4 new greenfield stores, on track to add 30-35 new stores in 2025; data-driven approach to site selection. Increasing innovative solutions – proprietary Titanium 360 has impacted top and bottom line; implemented $3 price increase on base UWC program (40% of membership tiers). Driving traffic and growing membership – UWC membership up 5% YOY to over 2.2 million members; running media test in 6 regions to drive visitation. Building best-in-class team – strengthening bench, improving capabilities, and culture. • Financial results highlights: Strong sales driven by UWC and retail comp growth; operational strength and site layouts enabled taking advantage of demand; SG&A managed tightly, driving strong cash flow and adjusted EBITDA; paid down $62M debt during quarter.

Net revenues increased 9%, driven by 6% comparable store sales growth and incremental revenue from new store openings. Adjusted EBITDA increased 14%. UWC sales represented 73% of total wash sales. Membership mix was approximately 42% Base, 35% Platinum, and 23% Titanium. Average express revenue per member in Q1 increased approximately 6% to $28.78.

• Revised guidance to reflect recent momentum, raising the low end of full year revenue, comparable store sales, and adjusted EBITDA ranges. • Cautious view of consumer given macro backdrop, balancing optimism about business with uncertainty of consumer environment and tariff negotiations. • Expect total comparable store sales growth stronger in front half of year; impact of Easter holiday timing on Q2 comp; price increase on base membership to support revenue per member; $1.5M marketing spend shifted from Q1 to Q2; modest uptick in marketing investments vs last year; ~70% new greenfield openings in second half; new methodology for adjusted net income and EPS no longer excludes non-cash rent expense.

• Uncertainty around tariff environment, with indirect impacts on consumer spending and supplier base. • Potential volatility in business, particularly retail, due to macroeconomic factors and tariff negotiations. • Possible impact of materials and equipment sourcing on newbuild costs, though multiyear agreements with suppliers provide hedges.

Q: About comp guidance, Jed was asked about the math and consumer pullback.

A: Jed explained about the quarter's performance, challenges in the environment, revenue per member growth, comp store member growth, and cautious view on retail sales given backdrop.

Q: Follow-up on free cash flow philosophy.

A: Jed said they model roughly neutral, pulled back newbuilds slightly to pay down debt, with high end adjusted EBITDA, CapEx, sell leasebacks, interest, and cash tax considered.

Q: On UWC member growth acceleration, John Lai said it was due to 5% retail traffic growth, with 10%-ish capture rates converting retail customers to members.

Q: On base price increase, John Lai said it was in most markets, rolling out over time, and Titanium mix has been accretive and steady.

Q: On UWC as percentage of total wash sales down, Jed said it's due to more retail customers pulling the mix down, but not a concern as it translates to more memberships.

Q: On tariffs and equipment, John Lai said multiyear agreements with suppliers hedge against inflation, with minimal material impact expected.

Q: On marketing, John Lai said measuring by 3:1 ratio for promotional effectiveness, testing in 6 markets with promising results, and could scale to almost every market.

Q: On churn from base price increase, Jed said it's consistent with test markets, with 30-day notice before price increase, and churn settles back.

Q: On media test measurement and efficiency, John Lai and Jed discussed measuring by 3:1 ratio and DMA considerations for media efficiency.

Q: On price increase mechanics, John Lai and Jed explained 30-day notice, methodical rollout across regions, and slight churn uptick offset by price increase benefits.

Q: On base membership churn and customer return, John Lai and Jed said slight churn uptick post announcement, but customers often return, with churn not a lost customer in most cases.