• Revenue: Increased 7% to $249 million.
• Comparable Store Sales: Increased 2.9%.
• Adjusted EBITDA: Increased 10% to $79 million.
• Net Income: $22 million.
• Earnings Per Diluted Share: $0.07.
• Adjusted Net Income: $29 million.
• Adjusted Earnings Per Diluted Share: $0.09.
• Adjusted EBITDA Margin: Increased 100 basis points to 31.6%.
• Total Costs and Expenses: $200 million.
• Store Openings: 10 new stores, reaching over 500 locations.
• UWC Membership: Over 2.1 million members, with a 2% year-over-year increase.
• Express Revenue Per Member: Increased over 9% to $28.33.
• Cash and Cash Equivalents: $16 million.
• Outstanding Long-term Debt: $931 million.
• Sale-Leaseback Transactions: 4 transactions for $19 million.
• Full Year Revenue Guidance: $988 million to $995 million.
• Full Year Comparable Store Sales Growth: 2% to 2.5%.
• Full Year Adjusted Net Income Guidance: $114 million to $117 million.
• Full Year Adjusted EBITDA Guidance: $313 million to $318 million.
• Capital Expenditures: $330 million to $350 million.
• Sale Leaseback Proceeds: $120 million to $135 million.
• New Greenfield Locations: Approximately 40.

• Warning! GuruFocus has detected 3 Warning Sign with MCW.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sales increased by 7% to $249 million, marking six successive quarters of positive comp store sales growth.
• Adjusted EBITDA rose by 10% to $79 million, with a 100 basis point increase in adjusted EBITDA margin to 31.6%.
• The introduction of the Titanium membership exceeded expectations, contributing to a 9% increase in Express revenue per member.
• Mister Car Wash Inc (NYSE:MCW) opened 10 new stores, including its 500th location, indicating strong expansion efforts.
• Employee engagement scores are at record levels, reflecting a strong company culture and commitment to staff well-being.

Negative Points

• Retail sales trends, although improved, were still down in the mid- to high-single-digit range during the quarter.
• The company faced disruptions due to hurricanes, impacting store operations and causing temporary closures.
• Outstanding long-term debt stood at $931 million, which could pose financial risks if not managed carefully.
• Increased labor rates partially offset cost savings from optimizing labor models and leveraging scale in purchasing.
• The company plans to increase media spend in Q4, which may impact operating income and adjusted EBITDA margins.

Q & A Highlights

Q: How did the comps trend in August and September after the hurricane impact in July, and how is October tracking given the recent hurricanes? A: Jedidiah Gold, CFO, stated that there was sequential improvement each month during the quarter, with August and September in the mid-single-digit range, and further improvement in October. The guidance provided reflects these trends and expectations for November and December.

Q: What is the outlook for revenue per member growth in 2025, considering the Platinum pricing benefit and Titanium penetration? A: Jedidiah Gold, CFO, mentioned that the Titanium mix was a significant tailwind in the quarter, and they expect some continued benefit into 2025. However, specifics on 2025 will be provided in the Q4 call.

Q: How sticky has the Titanium membership been, and is there a comp spread between your highest and least penetrated markets? A: John Lai, CEO, noted that the Titanium membership has been very sticky with no degradation post-promotional closure. The comp spread has been even across markets, indicating universal demand for their services.

Q: Can you expand on the marketing initiatives and the balance between trial stimulation and brand awareness? A: John Lai, CEO, explained that they are increasing ad spend and being more promotional, focusing on brand awareness through new mediums like digital out-of-home. They are being measured and thoughtful with discounts to ensure smart marketing strategies.

Q: What are the drivers for 2025, and how does Mister Car Wash plan to stabilize same-site membership? A: John Lai, CEO, emphasized focusing on driving retail traffic as a primary goal. Jedidiah Gold, CFO, added that they are encouraged by retail trends and revenue per member growth, with initiatives to reduce churn and improve conversion rates.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.