Mister Car Wash (MCW) 23 Feb 232022 Q4 Earnings call transcript

Good afternoon and welcome to Mister Car Wash’s Conference Call to discuss Financial Results for the Fourth Quarter and Fiscal Year 2022. [Operator Instructions] Please note that this call is being recorded and a reproduction of this call in whole or in part is not permitted without written authorization from the company.

Speaking from management on today’s call are John Lai, Chairperson and Chief Executive Officer and Jed Gold, Chief Financial Officer. After John and Jed have made their formal remarks, we will open the call to questions.

During this conference call, references to non-GAAP financial measures will be made. to these included the press website in earlier and of measures comparable release at reconciliation section today been Relations have the posted ir.mistercarwash.com. complete measures Car most to GAAP issued of A Mister Investor Wash’s the company’s earnings

which that – As reminder, expectations. could management’s company’s to actual statements, cause differ on to materially significant current may include today’s the a subject call risks to from made forward-looking comments are and uncertainties results

made statements call the are current on that present this advised be the today as of industry and our Please conditions. based are market understanding of and

review we are forward-looking in contained company’s update under in While unless from statements these third we to the as with such time Commission. to quarter obligation updated the other Please do Securities be so future, filings law to factors the the choose no Exchange time applicable may required disclaimer statements may by XX-Q in regulations. and or

now turn I Mr. Please sir. the Lai. to will ahead, go call over John

everyone. afternoon, Good

a while projects return efficient corner where across with pressures improved but productivity every It products which cost managing that slowdown in and increasingly have and our economy, on As was capital. of primarily opportunities macro of became experienced business, believe and an a services, where also year, inflationary driven year we almost a was in our on on experiencing labor stronger competitive invested and XXXX more where cost we downward a on a we as promise, environment. highest year team, and progress year turned also past our margins, I frequency, our more which reset improve strengthen our challenges model into We while we this the keener differentiate to eye I’d prioritizing expenses opportunities, and characterize it a reflect was got retail by year focused. the put pressure

XX% million. we sales EBITDA by to the locations, increased We $XXX to ended growing by XXXX, backdrop that by store year $XXX our grew XXX X%. portfolio adjusted stores. We comparable net revenues XX in With and with million XX% increased

fourth adjusted by XX% locations a Looking well greenfield new by we locations by and store increased record X%, the quarter, as XX%, grew acquiring sales EBITDA XX comp opened increased in at new revenue as California. X

of outreach; our end look in and and our of by the pulling which side continue of base; to five, growing number our competitive business distinct existing more the never on performance many quality; strategic ways our Titanium on six, existing improve UWC fortressing introduce As retail we everything new greenfield will pillars in ad we our X positioned M&A; our focusing we number we marketing accelerating drying and pursuing by are expand our XXXX, identified and number two, one, and program have package and XXX systems; guide barrel premium retail continuing for the back speed our reimaging new three, people customers four, building one the portfolio spend through acquiring to our alongside new into by do: improve footprint while focus number number on that our reformatting MSAs most rinse targeted and and and development improve strengthening densifying bench, by while leadership advantages. number data-driven UWC stores to our member of is

to who in human of and was high-potential one On meet matters. visiting capital our Car tuition be to program. recently the leaders Minnesota had happen I of future Wash, reimbursement recipient a Mister that note, at our stores opportunity

great adopted in that a better Minnesota. performance combines it’s from dashboard all sophisticated quickly example innovative unexpected into ideas of learnings people across algorithm our yields our how to this, new degree of business. also to It’s example she help track As investing can come very that our software she school pursues up in taking most a culture team people dividends, sometimes regional where a development, ways. and create her of data stores in another care foster the her in store-level dynamic with The applied environment they regional to an

many her’s makes stories special like have what to not and just work best-in-class a company operator, We it’s a us but for.

industry national XXXX, behind is most won’t road to the to car We’ve And talented one ahead to take for team the and no lose long in look immediate shared over we that of us our guiding who, experienced excellence. care people something of never sight will that sense wash customers purpose care of built has any before: building around easier. generate the that As a we with our our get a management brand allow doing know of value take the shareholder the scenes, extraordinary in we which run. stands turn, principle, done who

provide commentary more I results. our will the to call Jed financial around over now turn to

we everyone. throughout results quarter. good seen with inflationary pressures offset expense to the John, the able underlying Thank containment we of fourth pricing afternoon, was are and the broader and we and retail much with improvements, in consistent trends have Overall, trends pleased you, our are and increases. with Demand productivity year

our was modestly revenue our As was of a with result, expectations. EBITDA line ahead and fourth adjusted in our quarter expectations

store a XX openings. mentioned, opened big we highlight a fourth and locations, greenfield record, In locations. the quarterly X was new acquired quarter, which the John new As quarter of was

years. volumes our as continue very our and the and capital. EBITDA program optimistic million mature well, view investments continue under to average greenfield Express development XX% use ramping highest of remain unit our to and best X-wall toward margins to of XX% Exterior greenfield Our these perform of about $X.X X stores We in

store December sales X% $XXX some followed our increased by a retail to storms and fourth wet revenues net impact October quarter, on had month in the comparable XX% comp strongest During increased and likely was negative million. demand. November

see and Unlimited net XX,XXX of the members the basis, Wash members UWC steady year-over-year Club total XX% subscription Another UWC highlight performance wash was members. added our we our meaningful base million the in historic the down not to package the in On business. again, represented trading a fourth a from the sales increased any quarter of of just premium did we and not sales, from members did Once we X.X quarter. to number package see rates, churn way. club change by continued of under meaningful XX.X%

XX% in than and of expense came higher costs cost see the were quarter at our operating labor in to Looking better margins and to year. efficiencies. at XX.X% lower to adjusted we Overall, side expected the measures pleased of business, containment result were beginning fourth some last EBITDA compared

compensation XXX labor increased chemicals scheduling. store and and basis XXX labor XXX percentage points points XX.X%. The revenue, and a primarily to labor from to XX.X%. Excluding of points decreased G&A and chemicals Other line to decreased basis basis as XX.X%, better expense stock-based operating expense benefited

and expenses from to in service increased rates, growth-related investments. rents primarily costs increased increased primarily sale-leasebacks. operating utility additional The increase maintenance higher store Other related G&A was from

million During hedge. in interest $X rates increased higher because to rate of year expiration last and our $XX the quarter, million interest from fourth of the increase debt expense interest levels and

of outstanding plus rate SOFR to debt. plus During we paying rate LIBOR and SOFR-based our basis XXX. a now are previous borrowing on points This XXX a the compares to transitioned we quarter,

due fourth Our of options for increase favorable Adjusted XX.X% the in XXXX. XX.X%, was the $X.XX, per quarter net effective stock were primarily the in rate tax respectively, the and tax and from diluted employee back $XX The income add to for GAAP fourth was was of quarter net and treatment year-ago compared last up expenses, income non-core reported exercise the period. operating compensation quarter million the with quarter which EBITDA Fourth year. stock-based the adjusted share, adjusted and million, fourth certain $XX quarter. XX.X%

cash to equivalents $XX.X were $XXX outstanding cash balance and sheet approximately long-term highlights. debt flow At year-end, and some million. Moving million was and on cash

$XXX operating million net $XXX cash expenditures gross the and were by For million. provided capital year, was activities

me a few guidance. make let comments around Lastly,

of Our initial adjusted $XXX guidance million $XXX X% to X%, comparable sales million sales full comparable growth revenues of and expect $XXX the in second of ramping be The calls growth more difficult half to $XXX opened year. natural year adjusted of to first of in the We versus to income the stores $XXX year the to second drivers the of the XXXX million. are half and store that net of for EBITDA lap million million store stores more half $XXX year. of comp in greenfield net the primary this as lower being of the XXXX do up picked million

forward interest of we expense, forecast SOFR this the and in moving use a when bit makes the a for target. market, curve As a reminder, we

our of environment. big result, favorable our the reported versus million is is last interest the of expiration result rate assumption a XXXX $XX rising interest the and we hedge million $XX The expense currently change year-over-year year. As the very

reduce not in to but We great building stores to expense and continue expect the strategies to term. job quarter, did team the experience short interest but permitting fourth a The in going look we new forward, of any opening to continue the delays benefits related at material do process.

over robust sites estate pipeline. the real have a We with development XXX development in pipeline somewhere

new All is for approximately guidance of these builds XX things considered, greenfields. XXXX initial new our

disciplined for we opportunistic the with life. funding lease balance leasebacks, the be to that of SLBs, make we development and duration sale we our sense when need will terms execute targets Regarding lease recognizing

for sale company-owned leaseback. a operate to on continue We number eligible of stores properties

$XXX to last $XXX expense to escalators, believe for national includes along utilizing XXXX this Our year. compared cash approximately the million will we other point, and can EPS expect XXXX sale-leasebacks increase At million. proceeds million market, year $XX to $XXX with to both the when our of million expected financing. accretive completed and it executed we be rent the Between to between we sale-leaseback to this and execute sale-leasebacks sources be sale-leaseback target guidance rent year, of REIT

year. $XXX Our of for is based million. initial XX new this is $XXX initial on outlook million our outlook year XXXX calculated capital to the expenditure approximately greenfields outlook This full

that year some last simply certain in efficient As year. until our projects some offering the it stores in retooling we the Also, because on a service new this likely cost we were the calendar early was year while are capital stores open and on not to did work reminder, projects to includes more spending process year. defer following development new any CapEx the given for

have to approximately months we expect entire from our include it benefit Finally, regarding base new stores. the the rolled service across any XXXX offering. new of does take for initial out guidance to the it not XX And offering,

plan standardize to have also we wash our tunnels. opportunity we to further As use mentioned, this of many

be While we to at the margins early new earnings, it’s this the offering to into simply build our do too model accretive anything to expect and point.

to earn next commitment environment predict who team In play all to for over work and continue macroeconomic the will want our associates and out grow conclusion, and hard operations Mister hard working will customer each to while we everyday cannot our how help hard thank we Car months, the and to their every work strengthen I Wash. visit. XX members

With are questions. to that, we your happy take

[Operator Instructions] come our Bank question ahead. go of America. Please will And Elizabeth first Suzuki from with

Great. Thank you.

costs through also on expected operating are expense to general other your labor. the a Just how and flow store of year between cost the and administration question throughout and

Just how should increases? question I biggest have labor the think we And are on about a follow-up Where as well. those then buckets?

Jed. this well. are is I doing hope Yes, you

pressure, believe think really store remarks. are of We level from it in consumers impacts impacting going as the some you assuming there prepared lot the there standpoint also and from that how mid under just an we utilities about As pressure still inflationary low is an then assumption, line, underlying forward, to and the inflationary highlighted expense – the there, is – rent a labor the single-digit primarily out pressure. but that’s X XXXX the still

and increases? how that you and then after going take last have my market Great. And plan those much and plans labor through about is been increases over year. you point then really to And you can follow-up share transpired put up have wages maybe – question the to that historically whether that forward gains

workforce that the Liz, John. Good is will by of I our just start is now. from right state hey, in saying hear great shape Yes, to you. this

fully stores All are staffed. of our

flow rated have eNPS terrific out score. as and survey at XX%. great some recommend non-GAAP we measures, were We question looking crew applicant a Wash In that’s a we to We Mister conducted place engaged work? there. We the are a other of, up But super think happy would just Car to an that XX. report our you is

it has turnover kind sure Our And of constant. employer of creating remained a becoming of our fulfills relatively choice, an great goal environment. we’re making

X%, our able day a that’s – some wages and hours of little have to seen optimization with number year-over-year been mid-single our specific staffing consumed over we’ve are where question, labor we’ve So level. to mid reduce up your model, that roughly been the the by we offset double-digits by done per

are Hard future for from of we where overall, that’s have by gains. both holds, are but that And about of insight is managing sides productivity managing team offset to those forces. management but been up feeling view this So better us the equation. clear standpoint. or we Wages are a sit what to kind we labor through as a slightly,

Great. much. Thanks very

Our ahead. will Morgan next Simeon with come Stanley. from go question Gutman Please

the Hey, bit you John. of step guide? comp are Hey a running. about a down Can from Jed. we It’s talk maybe where

the diagnose and the So how if business about you the you can please X side retail the X? of thought the macro, to consumer,

Simeon. Yes,

of business. resale the on softness some seeing still are we side So, the

September our transcend a bit we really call. and and December as November, trends into Those and you strong October QX. last moderated we As just had on going into didn’t know, highlighted a little

the at of we of comp to laps also our to and end so the then that the in plus range in year the as they the or particularly calls greenfields the that range. picked and So that talked ramping QX, some just high and half of we natural half that difficult lap, start the end full of mind, minus, X% get comparison, given for about in strong to comps – be year-over-year first guidance really, X% store. in due really minus and or the the year up could have X% think some our Keep second we high plus

Jed, And I would Simeon’s add Yes. to question.

our on. when right I retail at now we’re look we think which business, laser-focused

weather, necessarily It’s customer. customer seen It’s We lost have so primarily coming in it’s less frequency. not in less competition. We a a what so we’re driven, macro believe considering reduction often. a less that’s

data believe to – This base. hard cohort this. don’t from coming support we our probably customer We bottom also of have the any is quartile

news other $X, year-over-year when north over I average eye think X%, we good is that at an keep the good. metrics up ticket just we on our of look is which

haven’t We – any package any percentage package trade material down sales. seen of in

is on know, up those premium beautiful. margins as nicely. packages our So mix package And the premium you holding are

can is to business and and to solid on grounds. we need just the at marketing now retail see So drive do better what what footing healthy is And we on get do traffic.

backdrop the frozen at, attractive more chance? has deal for then or head looking just deals willing in sellers? And your come that Fair the competitive you’re the enough. as everyone you’re is the as well as waiting yet anything as rate environment flow far down given and is more because right Or keeping there

Yes.

we’ve the look when and how growth, greenfield in doubling really tripling at previous we’re kind shared and we So economics have, given on development as we unit attractive our performing. we’re down calls, well of

to what sitting to sure has and at approach has been story us us businesses in M&A., M&A aware, sidelines we and being very on given and very are. – you’re But the believe how we’re helped our disciplined part we’ve to core. As our been overpaying overpriced happy be the of for making that get where not we big assets a

is So seeing what across alone we’re right right we’re now. and slowdown a – not now

all exuberant, healthy So that, standpoint. ought earth be. have slowdown because where the a if industry, of coming little what can that’s natural multiple back And We I activity kind a gotten in that, that’s use think a that we’re seeing to a to things from reset M&A down think across of things again, word. too is I

M&A we’re it forward. conservative our when very So going to approach comes

pitch. to swing at We’re every not going

markets that looks to right We’ve strategic said, we and if a and the us sure into do people. move That helps in probably surprising that opportunities a existing onesie-twosies. along to geography. look for is there going comes just platform known been that We’re make it new attractive,

to more So come.

Thanks, thanks, Jed. John. Okay, luck. Good

Thanks.

Thanks.

question ahead. Michael from Lasser next Our will with go UBS. Please come

question. lot a Thanks taking my for evening. Good

looking the last XX.X% X currently slow it as has been as So in growth the membership at base, of the years. is UWC

has You mentioned the been attrition stable.

that’s retail So new is it’s the difficult means been down. assuming business obviously, attract customers, because to that

So what worse can growth especially macro next look business will quarters, membership UWC over couple gets in here? a you curve remains how give from retail going like here? if of the look is the from pressure, the Assuming that sense us to of the under

Hey, Michael, this is John.

had You piece in worse. that macro to throw gets last with the

the So we’re better, if hope expect managing hoping for the this the best, that worst. but macro gets as we’re business also but

the as cost But look head. on batten hit down a at conversion, kind retail of With slowdown to the nail you we’re growth, the we a also in hatches, input as the our on and we funnel our member a as member the So to. UWC in near-term. the we have, we’re growth UWC side, UWC running as need top member of efficiently slowdown in anticipating

so drive we’re can talking accelerate of doing that I relatively there. significant growth. member some short line spend our any help growth. not be the we the And next time anticipating how it’s – UWC And answer – But over the question about things to several can really, quarters. we’re bottom focusing some to your retail And is us we going on flattish to we’re traffic

guide to thinner, there indicators, when color And very sheets running consumers, and bit to model, believe little about they and We periods. economic Michael, we it still are the savings more as thinking look pressured. Yes. still we’re balance together declining how a just you right? rates are add previous that the are at relative put

did XXXX, retail that given assume in you saw from of XXXX, the perspective, continuing the provide actual that on softness as expect that the side into members on business. similar guide XXXX know, we so UWC we we UWC trend don’t year-over-year a a but And in we

comment. add more I can Michael, one just if

I think if say, are just just XX% revenues for of subscription. hey, and out a we – our second zoom

economy, So profile. attrition be seen anticipating base strength haven’t the I they just so go the think we industry. beautiful for And I entire the one built there. relatively very things were the recurring, people I that waiting ask, they feel and are member you things fortunate speaks in uptick We really of that believe I’ll remained have with we one and largest of carwash the the a are to to of to was that’s that predictable built. think and member loyalty in margin a what that constant churn look of some or we’ve the I think When so again at down in we an we loyalty was that, base which churn, kind

fall going Obviously, shortfall? rollout well? incremental be parts. decremental Understood. titanium given assumed if an costs And of much falling lose year? the is on to My have a revenue second that sales is short de-leverage as both of offering growth a is profit same-store incremental in marginal washes much modest this to the fantastic with follow-up contribution – defining what of business each some costs that same-store out incremental can how Number see you ways your cut have associated sales that and margins the where from the how wash characteristic sharp but can to, pretty car guiding will one, on you wash that unit, part then you question two you’re of your is on my the

asked, John – in provide from jump and the modeling early it’s some will on color. that perspective days. question can But Titan, still start with and more first So you a we in the

while we we’re results we’re there some to need the over still that to of out we We’re piloting months. about think that and stores encouraged and tweak a continuing as that that next are handful early roll seeing, XX the things with in

just little we So that bit because XXXX. right make, in of a need model assumes of now, to of headwind particularly first the a half some of investments the the

due looking tightening But up. On labor productivity of with that XXXX. upside offsetting scheduling and at in to some as the we’re labor assuming we’re that we initiatives some any titanium aren’t side,

I so is us Yes. want why thing more can some brand-new better and to reengineering, an more a well package, as it’s program. overstate than brand-new is our of taken This to brand-new provide adding product a this just for in also as place resetting and service roll the long that delivery reconfiguration entire I system our this Jed, And putting to launch. out? color And as customers. a model service, rinse we’re drying

so size region think, going and massive we going is lifting we’re because as amount way, thoughtful felt And and a very intentional This of not in a is new we’ve by that we our a the always deliver transformation, huge as to flip it, we’ve but the through this got region And need effect, massive of have do the value. to And new a the earn day, rollouts. before, always shared pricing. with customers’ next switch. we product exceptional we’ve trust of that

we through we’re be, encouraged results, is the results where take to pull any value out the been with having but I’ve this modeling by share not I’m towards from not aggressive to standpoint. so you a things. too those that the many a but run there And asked believe through from be because going this And sales what tactics, through it early-stage service. to natural, then are and said of not guys really slick service, promotional demonstrating And gravitating gimmicks, people

staying going line year. on to optimistic, is but that have impact So ground lifting soft about years to kind really we’re this is we’re excited, what But bottom of with respect effect the following. in we’re we’re confident

in that are we’ve Michael, a then, retail the – we And try focused the mean, now, that different initiatives marketing sales bring and on I sense de-leverage, volume around in to very the it’s second to in drive sense wholesale one question right But to tricky continuing satisfaction a frankly, of we And yet. lean we that things. anything our are to trying do retail makes haven’t been quite – and seen But to different traffic. testing there. rollout that

to and at where take look when it pricing. assess constantly we makes that thing sense other is The and

Mister leverage point, at various some will this we’re we to help any anything the where is that believe And containment ourselves if of sales a sales leverage from perspective, a at continue I in offset While assess. particularly initiatives we decreasing. then planned still it days, and to look cost potential look as in recognizing that we early scenario to we found were don’t scale have cost containment something

much so good you and luck. Thank Understood.

Keith will question from come next ahead. Peter with Sandler. go Piper Our Please

Hi, some thanks. to everyone. John, Good of afternoon, pillars Good you. talked you hear of your about from growth.

that of improve spend in been them year. was One kind seemed like It marketing data-driven had the outreach. the of with test mode this past

indicating And give on on so an forward if sure push opportunity? I’m could to it. not you’re of maybe see where ready But where and you’re update stand you us you kind the you

hear thanks. Hey, Sure. to you. from Good

washing car to we So a there. days I’m fun some do there customers was and/or to A/B some were E, very – of and very G F existing promotional in early effectiveness standpoint, of – in move going D, discounted But members. C, A, needle back testing, lot didn’t very we’re that a earlier the aggressive Jed’s XX plus harken the we testing, and while and end, unnecessarily It – folks the of where to promotions dilutive. and years from do comment, discounts B, really having and

giving we that. base, profitable So and are member to that and farm this doing not while while determined we’re preserve sure the we customer make valuable away very

this night. the and testing, on for was digital released in Apple app announce website our and the of us our up is part great is just time the a So as that equation to of running getting last engine

one so face. This an is time different every And we really a building acquisition. out your that off-the-shelf you point-of-sale engagement going provider, member is app. same well this and been as and long think using Tom, customer This coming, can as a is app drive solution Dick that’s not a native Harry buy that to the customized with from is

line bottom are is, point. to So testing, Jed’s we

one We ultimately going determine move to have which the is needle. yet to

But converting not mentioned, can we’re is quite a traffic. it going We’re we so existing we reflect for old need hadn’t to that testing, and this mouth needed back to customers be to we as to drive again, members And done so successful taking and discount. with didn’t retail to honest priority been we and of We that I word company. that have into experiment you, as school in continue them advertise.

experience hindsight, a took that pedal, there point we’re slowdown scenes. retail lot we’re our to off going are, quickly very and to should be was some been we in from the we where more in probably foot perhaps going are have the And going aggressive knowing perhaps curve pivoting a we the And in now here we of standpoint. on behind right is moving marketing things but a there and and

again, wish to with share we stuff position not you we’re to call, at this we a more tangible So but this do had so in on guys time.

economy traffic. start is hasn’t although It’s big other wash that know prices I thought picture entire you, Okay. the retail industry. to Fair others retailers lower prices, a But enough. panned And problem. Mister And across the weakness. car in and a question shift around about this a of would Certainly, the the not then retail talk I wanted gas industry know also just services. kind John, ask can was I and out. to goods of gas that it goods drive lot blame that the we really from the

a business. are guys You service

there greenfield is just out do guess a could see it you lot pockets the of question the the country you I is there – is that and there where maybe retail playing a think of more growth be So weakness? role competition extra of that is, heart that do

we’re more still driven Yes. we’re customer our This the competition I again, think our you, think thing the it’s bottom back we rate that the on I not have to at historically. not – saving We weather. keep or with And And degradation macro there of our than continuing wish quite that it yet. which to perhaps. as that it’s it same been grace has be any it we seen base honest I The To foundation, quartile fact is circling has has And about. steady. to is our grow held that. good was membership, feel speculating member

But the retail So for think And mode is a ones we’re the we’re temporal question, only now. experiencing that some we time. been month-over-month quite not to in. this that now your has just this right softness

So that consumer impacted end probably impacted is segment having we back cut believe that right it’s the to now just low most at American the being and temporarily. they – are of

Yes.

a add and on jump of to points that. to Just couple

are So think it’s of UWC. retail, we’ve highlighted, it’s to the as XX% that and that, all, of first the important sales I emphasize

in We’re look seeing John’s in have a that less you that and a than at that When the in of quarter. slight balance when stores we are $XX,XXX, – are are portfolio. part stores together. December, And slightly they to of handful the four of income the the we those business that point, down then stores surrounding at did during actually more negative the hold those demographic, they of look demographic plus than are you

rolling think when though, the sun they We come will back Jed, breaks.

So emphasize to I just in want that temporary time. a moment is this

demographic helpful guys. Thanks, insight the That’s Okay. feedback. on really

Good luck. you. thank So

Thanks.

come question BMO from with Siegel ahead. Please Simeon Capital Markets. next will Our go

Klingshirn call. our Garrett for so Thanks on is Simeon. this Hi, taking much for

if on point possible. expand Just like that bit, little to a last

that well, could I your there kind you just within in you and UWC too? guess? potentially metro Are concerns out being in to across that members it year anything pockets noteworthy weather among previous different Are maybe different operate I’m Is you’ve issue call there been is [indiscernible], be Looking different anything an seeing seen growth. notable across there years? areas, member curious causing of regions if as not this that

when And the at We’ve scheme vehicles. I still car for your the uncomfortable is time, Yes. we have expenses The their their really think the clean care expense to and tiny Once a percentage of that way a the of overall car changed people you wash get no. it is your of you it’s overall we transportation a car good. fraction as is get feel dirty. short is core, having answer behavior. part things, all customer because people’s very in their changed And very believe

grateful. base result, And a the we’re has that, as unbelievably So member resilient. for very remained

standpoint at was earlier guess? a availability of guess, little are because area but the just a your curious that to kind is and rates that little Jed talked pinched, for how where year thinking months of And color. mentioned Was over to how sale-leasebacks? Appreciate – were and current there this within the just did your guidance getting that’s previously, those this about deals. what an And you have an you issue? levels, next I’m guys great. you from sale-leasebacks that trended it with some. an kind and attractiveness guys I do conduct mentioned in planned That’s challenging somewhat few was the last you still Is the – about I cap past,

But manifest necessarily attractiveness the rates. just a of buyer’s Garrett, question, borrowing do see Wash wasn’t get to so cap XX-year treasury trending still. deals very, for perspective those depreciation, was them. one these on in in to economics your it’s Yes, as pressure upward done get to you and bonus XX/XX buying where it the still itself we some closely they particularly to put increase, the at it able Mister a and from and over very cost and the does market, there we Car how attractive look still are time market market the start just that is sale-leaseback It is clarification what is, sale-leaseback the the

hit in have are to proceeds that target sale-leaseback right under that deals and growth number of we so our here about generate we the a need we LOI target currently that XXXX. And good fund our feel planned being able the we – now, and have to

Great. for Thanks and answers. questions much the Appreciate so it.

will from Our with ahead. Sachs. McShane come Please question Kate Goldman go next

quick question. a wanted on price ask taking I our Hi. question increases. to just for Thanks

expense just mentioned especially flexibility had much seems still option price up? to have additional as do high? of what an And was was forward. that is going wondering And being Jed of think I taken to prices much more if it, take context QX. a in be labor How in reality how any increase you the

tougher this John. like our to said, I we each environment, we Yes. the power. macro on to additional not the that feels But to company, Hey are of and it markets. move Kate, remain are your going and to think of appropriately a believe by have will our do it’s make We this for lean appropriate. push in is we reassess envelope. priced position pricing continue start point, we in any opportunistic us some time kind in I That probably when right saying and,

we our higher with are going telegraph focus premium we are launch that to more going the point. this more down coming we be accretive moving And hold upstream any over to very So, that moves turnpike. to And are this are packages on titanium will price line again, on and and for confident now the not a obviously call time.

detail And just the on of your carwashes further you you. in on update couple acquired Thank and/or any Florida California? any acquisition

with start Sure. will Florida. I

So, lot to operating running our now There different adopted was And systems. quite uncommon. it’s acquisition. PE-backed the platforms deal is Streak PE-backed actually point-of-sale integrate. biggest us one was What multiple Clean a fold different taken this of we that a frankly, and little longer into And right as platform. systems, harder the or such, three that’s and three Ventures are with was not a platforms

And first. really Coral, make three was focused going the that had systems. in making an knew not like back-end chose We this major the standardizing clustered as a and And on one down that And integrations we to Myers have so kicked they great the kind as of doing on looks But job. paper. result, their MSAs, The investment three we is team Cape ground are Fort road headway. amazing post-acquisition is on different can in. the the market

in the are getting close go then pulling Orlando, are Central Tampa to very, market. pocket. that, we be very going We shortly trigger to St. the in Florida Pete And ready to the after now

integrated here midyear, we for. will fully the be probably So, were then seeing we that lift start hoping

this little we a than anticipated. has longer taken So one again,

Valley California a rocking are the huge largest tuck-ins beautiful we their rolling where and culture these California we clean, to them. and to very, right the love are third they market, is cars in three our and California, and acquisitions, wash Central are in we strong. were is car happy keep very On now. There

kicking was December/January. peak which clouds of California a as But there. unseasonably demand a when period, are are cleared, through I a everyone nicely summer, we the is hope knows, – went little It are their we think up back what period set now for wet So, a great bit that is. it’s we wet really be to

and kind So, the be to protect, M&A we but our progress strategy, densify going where and sense, further the want on just our bolt-ons back made a in. markets strengthening are we do our that are that to speaks increase ton in the strategic markets it to we offense [ph] and position want to in and of of we only California penetration to don’t proactively

you. Thank

next [Operator Our will David Please with from MKM. go ahead. question Instructions] come Bellinger ROTH

and Thanks John taking Jed. the Hey for question.

mentioned rollout So earlier, rates. trying app to you improve the and retention

in incremental month average able about So, you attain customer just And keeping that times profitability sitting? terms upside the could from and get one can us what mean you you retention that? extra benefits the are tell just could to are now where maybe talk potential for if and of

Yes.

evaluate stickiness our speaks that we trap member a of lot metrics just And to a to of standpoint. don’t EWC will is rates we a other whole length KPI we to there are I program. again, that. this, that the that want we say though, because So, KPI, when fault from a and our look retention program. singular It’s as the don’t at growing that share

And longer goes saying. the on they the better so program, without the that are

is data with so and for to over the more moving a right to the roll is direction. objective of we have it even needle will we And And that app to last over But out functions improve a again, share are cool be, engagement, again, opportunity the But don’t here since becomes you. months. that there time to that, with the launched we several night, the lot next that number in us respect going just sticky. lot of

to And that point data think David, a help right. just through you

$XX you average customer, what it’s roughly per month for at I mean, right. the blended going it’s So, if additional on and a the additional customer. EWC that one mean look One month for program, month to

So the customer believe that with that is retention, to is mentioned forward. had going help app for this we an we us. look opportunity And as going to John

Got it.

second margin baked Okay. and And into then compression question that’s is XXXX. the EBITDA guidance on my

There margin unit where growth XX% close we member So ultimately are new about much still space. in been on more understanding there. you the could competition the is you low in mode, a on to And end, EBITDA we focused expansion, see haven’t rate are just and bottom? as margins this

You out promos softer business. have There retail got the of lot there. is a

XX% near-term, there see on So, lower you bound the as this something margins do else over of or behind is sort that?

of all have XX% still at fundamentals true. believe still that remain And said shared over We to holds XX% Yes. this we David, are we we business that the margin we intact. the as along, looking have believe long-term. that the

of As being million and closed in why in headwinds, shared the in a as that the sale-leasebacks margin is those we emphasize remarks. we that to the forma, right, on you XXXX, do XXXX which about pro think think that important couple have think about it’s prepared $XX you I rent expense,

And to we as underperforming particular. bonus and little believe there reset of bit be averages, back a a headwind. XXXX create when look a store-level and little to is have line bonuses at to to some look our to bit relative resetting some pressure we of unemployment on rates relative continue internal XXX% expectations then those also up going labor – you We that at the just payout, historic in

we into of XXXX in saw of creating bit the margin forward built a a going little in bit headwind. with guide. that’s compression a we in It’s little consistent XXXX. Hence, so what And

and We tightening refine, a much and it about and job We and have are we interior talked both to that able And some going done better. we haven’t have this on labor to team, in something just on productivity better they the really about them people getting initiatives. of clock, some have even going the when of forward. clock, past, express the clean and scheduling be at continued to look that number through the we looking offset of have great through yet, lens a we the is but at talked and of

we can the this capital looking I are that if people, about to particularly making thing thing at human in side I our this that the is and a help are opportunity. on future growth leaders investments, Jed, too, through story add cool lens, Yes. in think long-term we support

in their where to and And maintenance invest us and so sure and that our throughout support competitors those training, pull outsourcing not our we our continue have that those managers in are growth. many OLP facility investments done our facility maintenance. of organization continuing back But to people is going are we program help what on investments are making

And now ratios maintenance advantage us, where a in we largest the coverage facility that For competitive had have the it’s infrastructure taken it in company. with we the best ever have the of in-house. trained entire the have our and best we industry history

set nicely. really up us it’s So,

So, we could obsess margins and margin expansion. about

grown have top through beautifully margins line our again, – not are We growth.

shortsighted. we there? that are still doing stores, pull David, but we get on responsibly, a we managing are if We going business to would be do our you what to thousand opportunities back not are our need to know very

come question will with go Please next Our Baird. ahead. Justin Kleber from

guys, Justin. for for taking question. the Thanks Pete it’s on Sorry

with presumably that’s underlying some sense assumption comps, year, you just but was the think ticket flattish. around give about year, just curious than for line stuff. this top of this lower Can comp zero that. first First, the I to the average you X%, And the us it respect plan a the to said half

first what should point. seeing thinking XQ? quarter, be what Just trying at little comps maybe in given to seen potentially Just so we the understand are better the you negative this you in then better have a far,

Pete. Yes,

would bit a you So, works what ticket, see than just business little in traditional it differently average in the retail. this

that increases It’s have disclose ticket impacting of comp, externally. the the percentage having built points business. have but that an the and a You we retail something and we August But impact, overall ticket average average average we bit the last of We into impact some believe planned have pricing the XXXX. on pricing don’t the for took just UWC that is of that’s X.X little any that’s for not got other do about ticket. model we side side

out we are said, laid of range. like that in just second what we the the kind anniversary here increase first end QX, we will to half, consistent, how in of August relatively XXXX, the low – knowing August the you And then half, expected So, that it’s it’s obviously. at seeing be

out momentum we and and about plays to start then the end that’s quarter of just online by plus that expect greenfields or lap get to comp. brought be those in minus high X% how the during the ramp just So, half, the then natural first XXXX, as half the XX driven year, first and in at you particular, of as picked largely the in the in pick range up the think up second the

forward? know you kind to going performed relative how you is your or just think to you retention try That the have makes locations, then sense. tweak on there expectations, just discounts new something The marketing, of new just rates. been I have those member lot that follow-up, guys do to of you discounts Is testing just a do, continue that the or initiatives a member Thanks. there. out And curious

Yes.

well. we listen, still early So journey in are stage surprisingly, very as that

can per to inside well, At clever were building elementary of whole get we pretty with same of have having a we base to perhaps without And an really that the goes member base that give gun our voice away mindset, there a the do if why, And to shy amazing have try been farm. our do we member more discount honest organization store is back and some where tactics. is don’t extended of to saying to that’s big just job offers chorus quicker part types done of a there of any saying, such the averse accelerate ramp time, the discounts basis it you. another of on have we some be our there

more A, which which we are C, a ones of in approach. moving are our to G, lot retail probably But testing. B, now it whole aren’t. so year to similar a really needle doing of we And promotions, from that And our conservative ones speaks terms kind will F, know just end, and D, the E, to

So, discount some we gotten pressure wins had the haven’t race. their steady with thankful put And sounds, old the it store to as customer are whole we have to the are have hyper-aggressive strategies. get – or level. a And very having as as without we school we and there of slow it’s on others of lot that at

Understood. Thanks guys. much, Appreciate it. so

come will And go ahead. with our Stifel. next from Chris Please O’Cull question

missed in maybe wash land, us I can one? – Thanks. I the apologize volume what what you year? you for year are what are or then for full guess? guys. maybe it, the Jed, cadence help assuming Good looking investment but I And excluding the with washes afternoon if And openings the for per new of you wash

Yes.

to we together think as came and how the that about QX, we we there, of So, greenfields start with pleased we quarter opened number – open. really XXXX, I of that QX mean are just will in new the XX builds

we to not year the As about it’s over be but versus half think year. then cadence, will investment, of we to we the approximate second disclose overall favored of the did first think XXXX, the the in course the investment half the these the it believe CapEx as XX million. less of a slightly And about have able are gross We that historically a line and to payback $X than million $X just still on greenfields. that do we going we $X sale-leaseback to what are under X-year just over million, with able get be seen, we

XX% highest and use perform this These seeing return year best well. And the are greenfields. by cash-on-cash is continue to capital. our We in of our two extremely

making And building quality as test that’s as can, sure and to of going good withstand we these time. so we quickly we making a have asset are investments but the

this operate in point. We for you to team operating very XXXX XXXX towards place and at our heard not standards. our have pipeline, we in prepared working But even but a we them got got as have XXXX, remarks, robust the to – only are we

these you – how maybe of you going members? averaging maybe in membership or first think they ramp are washes levels X,XXX year, in terms their are quickly Can new UWC to say, let’s their to, what do –

reasons, not competitive going are that. for Chris, Yes. talk lot to of on a in detail we

the discounts earlier. the those doing what discounting A, in greenfields we faster and and a aren’t these member discount helps to base we us can we we reach of to earlier it’s on where that out UWC the doing in UWC opening the B question, as that where gates returns long-term these targeted though, base targeting. trying some Obviously, As testing, are kind and of greenfields, variables to of isolate going grow are inferred some member in help

Thanks. Okay.

session. remarks. And turn Lai John to this any question-and-answer for back over like our would conference the concludes closing I to

Well, us thank thank you you, today. joining and for everyone operator

demonstrating down who we to and by really are a look you women our one this demonstrate are and team we delivering tailwind and as and are really We It’s whole resolve, of a to customers. company. you to of exceptional all an They are got well thing positioned you volumes done It experience year, out you have our when great, really your have are we headwinds field. job some the of but able amazing lot what an in to buckling made great men who demonstrate speaks are proud kind face and how there the past of. where

continue. it’s As right, we the our will to environment and growth trajectory confident And the be up started. very us, to are macro improves, getting that going for we and are just

from XX is see XX days. super be next us, we for path, that will beautiful a we continue future people-centric. know we over company a we we on and in the But – this are back and back are the very checking confident now year So, continue months. bright this will to fared in I that’s how and check going building

So, thank guys. you

The conference today’s now for concluded. has attending presentation. you Thank

disconnect You lines. may now your