Mister Car Wash(MCW) - 2024 Q2 - Quarterly Report

Growth and Expansion - As of June 30, 2024, Mister Car Wash operates 491 locations, an increase from 449 locations as of June 30, 2023, representing a growth of approximately 9.4%[78] - In the first half of 2024, Mister Car Wash opened 15 greenfield locations, contributing to its growth strategy focused on expanding Express Exterior Locations[76] - The company added 42 new locations year-over-year, contributing to the growth in car wash sales and UWC membership[84] Financial Performance - Net income for the three months ended June 30, 2024, was $22.1 million, down from $27.1 million in the same period of 2023, resulting in a net income margin of 8.7%[80] - Adjusted EBITDA for the three months ended June 30, 2024, was $88.7 million, compared to $73.9 million for the same period in 2023, with an adjusted EBITDA margin of 34.8%[80] - Net revenues for the three months ended June 30, 2024, were $255,043, an increase of 8% compared to $236,894 for the same period in 2023[85] - For the six months ended June 30, 2024, net revenues were $494,226, an increase of 7% from $462,854 in the same period of 2023[93] - The company reported a net income of $22,091 for the three months ended June 30, 2024, down from $27,132 in the prior year, reflecting a net income margin of 9%[84] Membership and Sales - The number of Unlimited Wash Club (UWC) Members reached approximately 2.1 million as of June 30, 2024, reflecting a growth of about 3% from the previous year[81] - UWC sales accounted for 72% of total wash sales for the three months ended June 30, 2024, up from 69% in the same period of 2023[82] - UWC sales as a percentage of total wash sales for the six months ended June 30, 2024, were 73%, compared to 69% for the same period in 2023, indicating a growing penetration of the subscription model[82] Operating Costs and Expenses - Store operating costs for the three months ended June 30, 2024, included labor and chemical costs of $72,691, representing 29% of net revenues, a slight decrease from 30% in the prior year[86] - Other store operating expenses increased by 10% to $99,543, accounting for 39% of net revenues, driven by inflationary pressures and the addition of new locations[87] - General and administrative expenses decreased by 10% to $24,912, representing 10% of net revenues, primarily due to reduced marketing and corporate travel expenses[88] - Total costs and expenses for the three months ended June 30, 2024, were $200,043, maintaining a consistent 78% of net revenues compared to the previous year[89] Tax and Other Financial Impacts - The income tax provision for the three months ended June 30, 2024, was $12,655, a 76% increase from $7,205 in the prior year, reflecting unfavorable tax impacts from equity awards[90] - The income tax provision increased by 57% to $21.846 million for the six months ended June 30, 2024, primarily due to unfavorable income tax impacts from equity awards[98] Cash Flow and Liquidity - For the six months ended June 30, 2024, net cash provided by operating activities was $118.9 million, compared to $117.1 million for the same period in 2023, reflecting a year-over-year increase of $1.8 million[101] - Cash and cash equivalents decreased from $19.0 million as of December 31, 2023, to $3.6 million as of June 30, 2024, indicating a significant reduction in liquidity[99] - The company had $291.7 million of available borrowing capacity under its Revolving Commitment as of June 30, 2024[99] Debt and Interest Expenses - Total other expense, net increased by 3% to $36.971 million for the six months ended June 30, 2024, driven by increased interest expense of approximately $4.2 million due to higher long-term debt and interest rates[97] - General and administrative expenses rose by 5% to $54.622 million for the six months ended June 30, 2024, primarily due to $4.2 million in third-party costs related to debt refinancing[96] - As of June 30, 2024, the company had $925.0 million of variable rate debt outstanding, with a potential interest expense fluctuation of approximately $9 million for a 100 basis point change in interest rates[110]