Mister Car Wash, Inc. Q2 FY2024 earnings call

• Houston was impacted by Hurricane Beryl, with 42 stores initially closed but all now open.
• Q2 was a strong quarter with sales up 8%, comp store sales up 2.4%, and adjusted EBITDA up 20%.
• Titanium member adoption was 20% of the member base, and UWC member base increased 3% year-over-year.
• Opened 9 new stores, ending the quarter with 491 locations.
• Matt Marakovitz, VP of Marketing, is focused on driving customer acquisition through targeted e-mails, paid social, etc.
• Mayra Chimienti stepped down as COO and Tim Vaughn and Luke Kittley were promoted.
• Employee engagement survey showed 85% of team members recommend Mister as a great place to work, with focus on improving communications and recognition.

Net revenues increased 8% to $255 million. Comparable store sales increased 2.4%. Adjusted EBITDA increased 20% to $89 million, with an adjusted EBITDA margin of nearly 35%. UWC sales represented 72% of total wash sales, and 15,000 net new UWC members were added in the quarter. Year-over-year, the number of UWC members increased by 61,000 members or 3%. The membership split at the end of the quarter was approximately 42% Base, 38% Platinum, and 20% Titanium. The average Express revenue per member was $28.14, up from $25.87 in the second quarter of 2023.

• Reiterates fiscal year 2024 guidance ranges.
• Currently expects full-year revenue at the low end of $988 million to just over $1 billion due to shifted new store openings and Hurricane Beryl impact.
• Expects comp growth around the midpoint of 0.5% to 2.5% considering stronger Titanium performance and revenue per member offset by lower retail transactions and hurricane impact.
• Expects adjusted EBITDA at the high end of $291.5 million to $308 million due to expense management and G&A structure optimization, with some investments planned for the second half.

• Retail traffic has been soft.
• Impact of weather events like Hurricane Beryl on store operations and sales.
• Competitive pressures in the car wash industry that could affect market share and sales.

Q: What are you seeing in terms of M&A multiples in the space?

A: M&A has been quiet. Appetite for deals is low due to cost of capital and over-levered PE-backed platforms. Hard for buyers to pull the trigger on deals north of Mister's trading as exit and valuation concerns are present.