Mister Car Wash, Inc. Q2 FY2025 earnings call

• The UWC subscription model enabled 9th consecutive quarter of positive comp store sales growth.
• Added 4 greenfield locations, total unit count now 522 stores.
• UWC membership base increased ~5% vs Q2 last year, and base membership price increase rollout near complete.
• Focused on repairs and maintenance to reinforce store health, essential for industry-leading quality.
• Noted industry dynamics with competitor restructuring, highlighting importance of operational excellence.
• Progress on strategic pillars: expanding footprint with judicious site selection, driving innovation with next product/ service in pipeline, driving traffic/membership with successful regional marketing test, and building best-in-class team with new senior leadership addition.

Total company revenue increased 4% to $265 million. Comparable store sales grew 1.2%, and adjusted EBITDA was $87 million. The UWC subscription business was a key driver, with UWC comps up mid-single digits, partially offset by softer retail comps (down low double digits). UWC membership increased approximately 5% compared to Q2 of last year. The subscription business accounted for about 75% of sales, providing a reliable base of recurring revenue.

• Moderated full-year guidance upper end for comp revenue, adjusted EBITDA, and adjusted EPS due to Q2 performance and cautious retail outlook.
• Anticipates retail trends in back half to remain consistent with negative low double-digit performance seen in Q2, with Q3 comps stronger than Q4.
• Base membership pricing adjustments to continue supporting revenue per member.
• Slightly moderated new store openings for 2025, expecting to land near low end of planned openings.

• Macroeconomic headwinds affecting discretionary spending on car wash services.
• Continued competitive new builds which could impact market share.
• Potential indirect impact of tariffs on consumer behavior and downstream economic effects.

Q: Just on marketing, what's the approach regarding promotions vs brand awareness and balancing ad spend with macro backdrop?

A: Initial focus on awareness to generate trial, then transition to membership. Tinkering with offers, seeing encouraging results, and will expand testing in a responsible way.

Q: Mentioned increase in titanium sign-ups in July, how to think about members sticking with plan after promotional offer expires?

A: Encouraged by trend, believe capture is sticky with some fallout expected but overall can drive titanium mix higher over time.

Q: Color on investments in repairs and maintenance and average lift expected after remodels?

A: Repairs and maintenance investments to maintain industry best facility, necessary for uptime and quality, with no specific average lift stated but essential for long-term store health.

Q: White space opportunities in U.S. and biggest challenge in expanding?

A: Large U.S. car park and industry offers white space, challenge is strategic site selection and ensuring market attractiveness, with focus on greenfields and M&A for growth.

Q: Why grew a little slower than industry in Q2, and who is share leakage to?

A: No benchmark for same-store sales vs competitors, share leakage not specifically identified as to who it went to.

Q: Weather impact on Q2 and if marketing can be rolled out faster?

A: Q2 had lack of weather tailwind, marketing is encouraging with 6 markets, will expand test into additional markets in a measured way, being intentional and deliberate.