Mister Car Wash (MCW) 2 May 232023 Q1 Earnings call transcript

Good afternoon and welcome to Mister Car Wash's conference call to discuss financial results for the first quarter ended March 31 of 2023. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. Please note 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 Mr. Chief and and Chairperson Lai, Executive Mr. Officer; John Gold, Chief Officer. Financial Jed their Jed questions. we and John formal have to After call made remarks, the will open

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

on today's are expectations. made differ understanding based are may of include risks As uncertainties statements which comments company's a management's the cause Please on to call forward-looking statements, that as the this and actual made subject and call current the reminder advised materially of present market from results significant today and to be only industry the are that could company's conditions. current

While so law the they to no future choose under obligation these required the in unless update statements company regulation. may to by do are or applicable

Please the Commission. and company's Securities from filings Exchange review the to factors such time latest contained be time may with in disclaimer reports as XX-K and XX-Q and annual other forward-looking statements the updated

ahead, to I Mr. to call turn please go would now the sir. John like over Lai

eclipsed to Good our program a made the give for headline the thank QX I'd milestone two for This thanks afternoon possible. XXXX member a Unlimited you and team The huge Club everyone, million hardworking and earnings that like the our special call. for our joining this Wash period is company is Mister to mark.

to providing new the of we a stream and a would primarily of side flow. strong XX% capture nearly to than to little revenue revenues what rates. weather, business member continue retail perform our the retention recurring consistency were with member subscription have our first sales well due softer liked quarter free predictable and while cash that subscription-based are And and fortunate feel We our

stores given offset are are in improved making while good our almost that's on company, Wages year-over-year model by standpoint, expectations. labor on our across productivity fully primarily every that's in and store. opportunity in by labor shape. a smart From game but basis a reset we're modestly G&A staffed up to managing our investments the playing the through near-term long people, the scale responsibly margin And front resulted

to For were $XXX stores. sales a opened greenfield came sales million. at EBITDA we new and X% down in the grew $XX year-over-year Adjusted quarter, four decline. Comparable X.X% X% million, store

our pillars growth Outside of the on strategic and laser-focused drive in that the will long-term. financial near numbers, remain we

and new retail our number our leadership our our portfolio; strategic marketing base; retail on and expanding acquiring implementing six, by UWC As a footprint pursuing spend accelerating our ad our UWC number building and reminder three, pillars two, four, strategic performance and development improving M&A; and position of five, number member premium Titanium focusing investing strengthening one, new are; number our existing growing number people our XXX customers; and offering; greenfield in improving bench. by number the

as to to this of results Titanium each encouraging. rollout. drying and We been XXX across XX key the launch opportunity our systems our have in like are XXX the taking We're in areas progress strategies. and offer markets Titanium is part We're stores stage these of Early also make around rinse but this to that of new our making currently and three fine-tuning improvements marketing material product. I'd highlight one launch

stand us truly proprietary XXX our differentiated it Wheel a of us the advantage out we of are Polish is this Shield chemical things want to get distinct many and before right. take and significance off-the-shelf introduction, that competitive products integrated that our one HotShine remind our Carnauba it a gives Titanium like vertically extra that for everyone there. time out that the I'd helps is to of program. Given like the service

What's provides. gives game-changing unlimited per the a truly the what's remarkable about is plan, drive this it And confident time. average wash and new introduce this us we that important opportunity most to shine offering over new will feel level is of premium member which revenue protection

everyone launch we we're bit to details, are strategy this you us irresponsible more come. to with still throw know to out of not for Now uplift the to tweaking we more We model until We're project us going that certain data at because any many have chopping that numbers be would with have patience more of provide to it elements some time. out. our and ask the over

thrilled to continue background is as a to we're Mary years from People announce initiatives. world-class publicly Officer. Porter experience brings a over her we of Nordstrom appointment build fit new XX and people-related our Mary team lead and of our Chief to the Finally, perfect

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

top Last everyone. store The and weather Thank going you, to backdrop, to of John, heading different and difficult. bottom trends benefited lower favorable labor very We into challenging be afternoon, the obviously this the first and quarter we that conditions first were knew a quarter growing be line costs. year's and comparison first was from quarter the was year's year. most knew our macro likely good strong

within plus Embedded were provided comparable that or a two in of the guidance the or could our first the while to the we quarter headwinds flat first point sales did previously than store range was assumption that or weather full impact more year minus be expectations. results from still half the expected,

X.X%. total revenue X.X%. the store increased store on two-year Setting increased first lap aside a sales decreased the stack basis, and X% comparable sales net difficult comparable In quarter,

significant detail As John don't factor mentioned, we because in in most it's weather, quarters. much swing talk often a about simply not the

particularly total, first the quarter hurts negatively store the quarter a simply of estimate and XXX it business, approximately on impacted excessive was XXX side. big rain too sales ignore. the our Many In received comparable our this was of weather to points. But where by markets to retail amounts rain basis we

wash sales XX% first the XXX,XXX the of basis, finished year-over-year in On represented the subscription more of in and Our we quarter. a the quarter. members strong the UWC remained total than sales net number with quarter business XX.X% members we million and and UWC added increased steady two members.

we past the club any for the one package from package members base milestone of churn years million our Over we've company. of and see trading did from we size rates course in not the a down meaningful Once historical way. added not the is three did this and a This to doubled meaningful see significant program. premium change our again the members

of to greenfields development the On mature and remains XX% and four-wall our in opened we of $X.X ramping Exterior toward locations the expectations. unit first strong our this million side, margins was our during under average volumes approximately EBITDA years. quarter, three greenfield four XX% with Express The performance of in line new

headwinds increased pressures. points and XX.X%. basis side a XX the stock-based basis XXX On to basis of revenue, as percentage and expense store and compensation experience labor chemicals of the and expense increased business, G&A to to expense points X.X%. XX.X%, to operating inflationary XX continued Other Including points cost we decreased

service labor operating line chemicals regional primarily infrastructure. costs. and rents increased store better primarily optimizing Other expenses scheduling labor benefited labor and and higher utility The from from maintenance rates

last during more We wash sale the same leases completed additional last to leasebacks year year. time compared to the due car have XX

As cash million XX% a result, increased rent quarter. $XX for to expense the

and company were investments some costs development and relatively leverage and continued in expenses public and growth flat both such against G&A reflect investments. other areas support to as construction previous

year the to to due and first interest last our the higher quarter. interest $XX increased million rate rates interest During quarter, from $X expiration hedge of last expense million

quarter year. effective Our year was compared of XX.X% stock first exercised primarily XXXX. The reported last to employee smaller related for was to to the quarter the for options GAAP tax this due a compared XX.X% to the rate benefit first increase

Adjusted income adjusted and per in quarter. diluted and which net $X.XX share stock-based adds certain respectively expenses $XX the back compensation net operating and million were non-core income

EBITDA year, a to were from increased basis, sequentially adjusted down points EBITDA margins million was last on down quarter first First XX quarter up XXXX QX year-over-year from $XX X.X%. but X.X% sequentially Adjusted XX.X%. basis the but

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

our remains strong sheet balance expansion. we Importantly, and and continue self-fund our growth to

provided operating was two sale-leaseback the quarter. cash by in and expenditures $XX were proceeds activities first net million quarter, capital We the million. million of aggregate $X.X gross transactions For completed $XX for

year is full XXXX unchanged. Our for the guidance

$XXX revenues of of $XXX to X% are adjusted of million $XXX sales store net of $XXX million. adjusted expecting to $XXX growth million net still $XXX Comparable and million. to income We X%, EBITDA million to million

our Titanium early point. new the in new our XXX to expect into first target our the while guidance model half. remain margins in new over store and offering not does accretive it's As roughly with anything be the the to time, of XX% XX second benefit a any and half we too include still the from to XX% earnings with in do greenfields build of the offering, XXXX approximately this at comfortable openings We reminder,

couple A around XXXX quick guidance. callouts other of

expense $XX sale sale-leaseback to Between with completed million. executed year and last continue escalators, approximately along sale to still $XX leasebacks are to between the and be we the proceeds we $XXX remains XXXX to projecting increase assumption million rent $XXX cash expected $XXX expense million year interest to Our expect leasebacks this of million million. rent

quarter XX In quarter. end locations more to sale-leaseback before and of closed the expect on far, have the second on thus we the close

$X the operating first expect second approximately will line. result a other we rent As from our expense be quarter. million expense to up This quarter store impact

still stores XXXX. longer million expected greenfield as lead as some the openings $XXX XXXX and to XXXX $XXX to times given deferred open expenditures in capital includes projects in million are expenditures new Capital be well planned and this for to

throughout our XXX store our expected drying making year. addition out Water TDS the significant improvements base The the full are is new and entire of process next to rolling In stores. rinse systems offering, of across to to end implementation the and Solutions our we through reconfiguring majority run Titanium

against success good a progress is environment and future. feel the of Wash the our we are our lot thank customers be and challenging making we Mister to and done macro team want recognize strategic is remain our the initiatives the for to foreseeable closing, I of work discipline to still entire likely there for business. about In but the their to dedication Car

happy questions. With to that your we're take

come now And will the UBS. the [Operator ahead. question-and-answer with Instructions] first begin will We question from Michael Lasser session. go Please

evening. a Thanks question. lot taking Good my for

the to Is of in improvement in an the business? getting in weather the year? internal your just drive the make side did the going to the for Given more assumptions the favorable? first changes retail you shortfall any rest quarter, What's it

this Michael Yes, is Jed.

good to and afternoon, good hear from all you. of First

the the So as weather factor at the impact so transitory. as And – in was meaningful look we obviously, the QX. the we as look year, balance at we a there that of view

and So what They is trends on as rolls have seeing adverse are we're positive. in that these an weather April off overall basis. comp gone April

comp, normalization hit guidance. being So a of seen balance us a look in year the we the bit able the to comfort we come at have and as little overall gives and some of which into

is The thing see add getting QX. this Michael, did can't I'd it Hey, it John. than any is only in wetter I

record the had Lake the impact of Idaho, California but states did, term Michigan, quarter the wettest it in but business. we years unusually use So an perfect Salt if could our I like storm on particularly first was on had wet country an Boise it one and City, other

we over regular should business. we time believe to weather normalizes get back though and So

impacted due end comparable the you last difficult Yes. at the what being is at we had when is and And of by were range. other high first at would while QX, Michael half the in on that we second range, of talked we weather, to being have. the I the about was the that the just end look In low it half range, low of end the QX toward thing jump add one call

budget. we a saying Michael, as excuse weather for an never have missing we internally that use also

of given people washing out we've it's that a when little quarter ourselves this raining because one a car. Although, buy bit on their aren't

What is Makes as quantify have tweaked entire program. program be, sense. you in what it will a Titanium want program My you've learned chain? to don't from it the to state understanding so result follow-up the you of where the you far? the a question already once to impact you you get And able want how be deploy fast of across to the

some have there's looks little to Hey, say, we're pleased. to them a XX-odd any at maximizing so we're early-stage elements around still Michael, of trying we're how ensuring trying we're favorable certain we expectations specifics not what and to are right tactics. our – marketing than of things like bit to in positioned other possible, around we make launch quest the people now, tweaking results. performance our and seeing in and strike that right very that And it's exceeding stores strategy and position balance. to attractive share correctly an the Again, very thing of core, this pricing But that revenue the many art in as as there's a while it as the to

with windows customers up so service members I impede And is that And cases become to then zip our and have a articulating and will piece the stores speed, introduce them we're we What they them designed fine-tuning but them. their think to team accustomed we're some getting experience to approaches model stop literally approach don't that in existing to different our so where still only and our made other interacting even through convenient around we've not make their working through is the it where in we because with pause to aware. members.

Okay. much. very Thank you

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

had Good a didn't how pretty you trended two taking we're West. afternoon. Thanks as just the weather since maybe our in see Hi. maybe for just And high markets retail one was the adverse rainfall We the regarding question. where average. company the wondering versus questions, they

it that's out bit little at or if all? impacted at a projects Just all delayed was pushed greenfield your wondering or

Kate, Yes, part I'll jump of question. take I'll first the the in.

at the the you number just were year. the retail a you days When not precipitation versus threat we in when where It days days the of side when of mind, handful small this in look with the of look of and the markets So the business. in on -- the impact number there year particularly was look Florida. number at with it's It's precipitation And of last has keep an rain. just precipitation. particularly, Southeast,

the were market. days particular comp digit last we that year for favorable to saw store this with XX% year, up Orlando, number example, It double and So of in was precipitation. compared sales

of a correlation the in we a So of markets handful saw favorable well. favorable majority where in high as markets we impact with the weather saw, comps

take part. the second I'll Yes. And

an going in don't greenfield, effect. think with to respect delays So any I it's to have

the XX we're we still are do don't us year, We projecting and on see track to to slowing hit weather that the this down.

Thank you.

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

short-term of we Hi. bit ago Thanks. retail a but a in you I some back April Good morning, when A see started to XXXX. think of go weakness of first the everyone. year perhaps question, was

better. it So, sounds April like getting is

of or lap some that to side noise house. the these like compares Does retail weather some You in get retail feel easier there. as you're you it starting improvement on see the stabilization

Yes.

that just second a the So, the bit you're right, quarter. as easier at as into and side the does on lap little in Peter, look then move particular, we we retail April get

those with largely weather moderate and as be seeing are line, benefit improves the historic to retail trends averages in there. We more April

then, hear. of midpoint to you're to it it's Good are to on Titanium was little maybe the end a think by at pushed clarify Or to it I next Great. to of of Jed wanted the the finish next the right year And next longer. still sticking you ended XXX is said, script. you rollout, if just out year. it end year, it -- Did going Okay. going the just I

Yes.

get middle because next Jed of little we and And you're launched of is question and belief is, year. the can up in simultaneously, that conservative my all bit the wants and wiggle of just with thing this So, us by put CFO wrapped that, both I poking he suggested actually we to a give Jed bit maybe being cushion. room has that little a that

launch, with rush We our with pushing a the we and material don't transformation can. entire this drying want it. we're to to as structure again, new So, new that coupled Jed's is pricing. And product earlier and rinsing coupled team hard the as menu system, comment, of internal

on time. and -- So take to we've in get to to do end, stated more to we're occasions, But anxious our we're multiple right that there's place. nobody this going going as that's it

place chopping, get bit. Our in to then see at this hope stores are the this revenues and to team. over what But we time this lift than be management

So...

about to as gone that but be days early, locations. technology, to we into in the each we as car we've Keep go blower continue Titan, going maintenance overall also learn of as mind rollout, implementing optimizing the wash the to rent not this. ground the just talked we're think we've at there only this the we And teams improvement configuration about going Peter, experience are on leverage in these

know, -- you know. what So you don't don't

team want not we while And as so we're pushing internal can, sure getting our of the we SKUs. ahead to hard make we're as

Yes, certainly exciting like an change. the sounds conservatism Okay. appreciate and

much, thank very So, you

Randy Konik Your with next come question go from Jefferies. Please will ahead.

more My two I'm that forth. Thanks, differences have I I or or you've seen guys. interest questions. up. guess so and gone just rates understand one, so environment, in and deal as to out the there's want on I sellers expect there sure changes to first guess see

environment to XX give on just to super Thanks, helpful that be next would curious how you the of us That the I'm and really start. morphs just months. over deal So perspective, guys. kind think XX

multiples. the that think have a forces interested what kind market, of, kind underscoring for now, Right driving sure most And EBITDA going a assets. And, their on a I'm quality a as right the little adjustments. the think play now. HI, of are range I to other is I headwind, say, double-digit on interest environment seeing at kind to real bit also Randy, EBITDA cooling would in rate there's average, are approach more I of looking is at so think effect folks but we're of in -- lot versus with I low of

So position and in. But I more the the early and folks think has leaning up their a scaling in thing. set that in establishing market we're good that's interested now rationality were in

it. from performed some unaffected changes market double think in you how I on in a you've I row, in us market, that perspective up gave weather up nice Orlando of first quarter quarter believe, a in strength metric good you quarter new Jed, Can digit. similar -- perspective like give a And two member us was and in growth that second the perspective, XX% comp in then, up Got on quarter. I a because it -- the shown fourth quarter think XX% XX% this

just of or I get those robust continues on membership kind want in than to more out be corporate balancing to how So growth markets some robust that perspective non-effective average? the

Yes, Randy.

as I talked the we've is So, of the that top mean, volume, about. retail funnel

tends there's And headwinds. that more so, more weather market. retail any type they're to seeing when we're sensitive customer sensitive. of They're to sensitive is What across more to be macro any the

And look at specifically. Orlando impacts that so, when you how

all, sales, in about, when nicely. look held it's we've UWC at overall churn. you seen of uptick an First talked together Like, very, haven't we very

We down. members haven't trading seen

and piece. had the across think And an markets that's didn't. all markets, weather I both important that's those that he

at digit retail fueled volume. like as up double Orlando look that up a there saw you were by market well, sales positive being that had retail volume, increased when we UWC But

Modesto the other as Valley. XXX Joaquin Bakersfield on point alone. overall So California, end San headwind spectrum, the a the comp in California was for about example, whole basis of to the

particular volume was UWC by sales the to and weather. due of UWC lack So retail were impacted there, those through -- in the markets that volume coming or

weather that -- to We back come expect that as there. the expect and improves we

guys. Thanks, helpful. Super

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

Hopefully, to I'm ask not guys. going it's too Hey, noisy. two.

see a follow-up, just is picked and what you number same or just guess, basically Like, Jed, said of clarify, First, the you hasn't additions was that changed, subtractions additions I hasn't. twice, churn think maybe -- mechanic it the and to up the is different? staying if subtraction the of complexion to that I said it churn, overall means the

kind question any tough backdrop. is, thoughts thinking if question done know how curious on may any of you. it. in membership evolve second more recessionary And but tougher updated backdrop, you've the it's a I Thank to a on answer,

So the question. first

subscription The membership And within one impacted second see we think the first. be a of is how of I there. neat environment. things and start Maybe $XX.XX consumer will question our almost inflationary is extremely about one in that's with every second high affordable, I'll out one was, that reach $XX.XX, the

And cost point that getting you a point fraction overall to it bucket. respect feel from A expenditure tiny B. point for the A their in to that all it's of their on getting point the to really of transportation with total spend from things is budget, And one good B,

that very just end I think, out cutting start will let's and that back recession -- of say, lot to a loud on subscription. are question, So I carwash that's think wondering in looming, people a one fair people discretionary a it's subscriptions, a a if there's

throughout this our to the again that it. churn has volumes we've the remained and how flat fact last engendered loyalty -- and people the stickiness period valued have I much that think speaks XX-month The

knock wash believe that to is top that one subscribing the of going they So on right we Simeon, that ones steady. hold quartile is most now, the in the value hoping the all different their we're memberships to and car that folks that, wood, the are with with is all

further. churn then, bit And Simeon, just a little down just that break rate to

with churn the the month we seen. members the off by about way in the end those and the we represents think of is during beginning line the have then of the month. were that historically active percentage that were what So the churn it quarter And rate at who of fell

up-tick. the headwinds adding way members XXX,XXX we whole with the impacted then we as and mean talk an as point, see traffic John's UWC macro was. the didn't UWC about it I retail To a

has how see more held we're UWC I think growth overall, to there with want overall, UWC we're together. the always pleased membership, we but -- in

up-tick helps just on the much that capture to retail consumer And educating becomes the rates benefits UWC program. UWC of intense then particularly customers the differential in slight and price and the more we're UWC the but also, focused into team that trade program a as and between seeing

Yeah. so God add loyal because Simeon sticky, and I UWC say, we is thank imagine thank that base I'd God wasn't to XX% UWC remained only can our had and for not our of thing the place had internally this it in revenues. member only has we close and program

let's would but And just case see in an not. a It we're up-tick be did we cancellations. worst say, scenario, whole story, lot different

a So be business we're grateful our we're in program really, this spot. it really for to have very to And good and central to model.

you. Good Thanks. Thanks color. Thank luck. for the

question Please will with next go ahead. from David Bellinger Your ROTH. come

Thanks guys. the question. Hey for

and if the on back time. versus type been through you credit look at But no change steady churn and Another some mentioned follow-up peel expirations. you churn some call and there of that's it real voluntary levels card for that churn you and involuntary maybe

the there? your can you to upon a Is core anything surface on that like under as customers. anything Just going read-through expand

No, been changes. any there hasn't

we've As shared previously, our card churn half of credit comes from declines. roughly

in customer, we know once if get program. into have and little We a control I should they when that. will order back come their that will over member oftentimes But very a you cancels do say, member the house

there's taking re-sign come fact really a temporary up of kind they a And financial in our where part vacation. we going XX% former that But back have to that is a on and/or boomerang their hiatus trend due members beautiful they're the of neat. long lives effect. that's And of and this hiccup

get people of folks dissect is front being we program real reasons big and But our churn other tail have engagement the we has proactive us that we is how the initiative the to more their been where of for opportunities a front in internally, on which can utilization out off. why starting

Peloton will, get again a working to And quite one-times that that place how their two to out figuring or in we're we're there bike on but three. we back do down of it. have if not still user you model to now now fine-tuning yet the pipes per the throes times that in because month we're on is business month And

John. with follow-up That's the titanium. systems on it, Appreciate reconfiguring helpful. the and just my wash And rinse

once footprint? complete, finally volume a those unit of some store are fully of kind of on So get implication once Is level a your per to throughput through different stores we kind tweaking you basis? there should some handle the expect

throughput implications. way running our highline speeds beautiful an flow It's process out now. created to set question have of and we in we're five throughput up No in people flow all very maximize stores can interesting this the minutes. because right get literally optimization where No. And through we're do

our we've stores created an So de-bottlenecked operationally and easy that's unbelievably our customers. experience for

from way the have is them to a people going where about intense. really we move here trade be objective throughput value more the up profitable good But because we and to So feel real into premium natural standpoint do more is today. sit packages but a it in

Great. you. Thank

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

the prior greenfield from guys. as follow-up I one for of Hey, wanted to to it good questions. afternoon just questions it back just are thinking pull perspective, first funding in the Thanks the as But on any past about has risen the cost a environment. taking the competitors your new builds or so? change of of openings pace dramatically of pretty on year capital any seeing you greenfield here or in the relates

up But of the capital it operations density kind watermark network funding seems it's right off of how cash capacity an now you from can stores. financial and there's limit attempting future having to if be. growth. kick strategy their But goes up, are about folks of the pushing cost high fund build a your almost everyone free upward just think And what environment. to much in revisit to can I'll terms I cash have as they like is then and talk actually flow the Jed, of it So, through

end that can lot lot there's think markets. that truly be. has just much are that aspirational more a move which I so expansive that's funding of -- out platforms aspirationally of a new by there and tighter whole there's to I having And And very that folks And of into driven question much gotten a current the to number environment, of lot to think vision to a had how they your -- expensive. revisit

And Justin competitors mean that not bit to just first equal. of little a all, are all I is to add more

for think different looks competitors in different in about keep build-out locations. capital different it's mind greenfield an to I markets. for access And XX-month these

And so these to seeing capital is we're committing greenfields. what we're

gives perhaps the just flexibility that We're one business in we where having others have players have flow been may have. in that not the larger the that's generated this a that being from sheer to due free space fortunate the us scale position cash of from generated we the cash that's flow

Yes. noticed it. That we that were to elements additional sense. you're being tactic to makes these no cost that just is all stores an and is Is An of one deployed existing on offering Titanium member. marketing you're for existing you referenced where just one your follow-up across incentivize tweaking, if the launched you or up? month Got service members trade of Titanium unrelated

makes was being speak a that's that not tested test we assessing Yes, or and currently going we're forward. the sense as against and that control whether

Best luck. guys. Thanks Got it, okay. of

go Chris Your with next O'Cull come Please question will Stifel. ahead. from

the just follow-up to could Thanks. be just markets had on question. competes that Good development? a prior afternoon are that of any based competitor Mister soon you John seeing guys. that I saturated within

not share. starting duke start think things we're to near anywhere standpoint a the it runway in apex from industry a Yes. and has and to No, mature really we're to are long growth I going for still out where

the think that X,XXX always That for another of and potential innings said, the the couple call exceptions be in just space at TAM that we're there's a can can space in and washes total of car the we pile. kind XX,XXX But US part, the what have white the any we most to more car of support. middle park looking it that

that's this what's level driving so expansion. And unit

win. two temporary experience nicely built quite that end the focusing in if to is the the one service. recover this we markets what fundamentals we most market been has we speed, customer backyard, of any day, are on is building our kind question think the we where superior the the the at intensity quality, but going impact all If in of are picked stores elevated delivers that's centered think level because our anything up, that as operator on of we impact with may our see seeing or existing leader, And customer of around I a we've the to

draw on units. platforms on if and those and on think can there's the by bunch evaluated basics will end a can health whole throw at not not delivering to their a I of of comp clean day all here, the reckoning you going the be right? store the about shiny. of be will ultimately, but of business But end be underlying But day dry up -- in sales, I you're

let's what look curve. fares and So, their in up they're see super interested in aggregate maturation for like? And on do how just unit everyone that good there four standards folks three, and high are those quality are year reflect volume are some AUVs locations. brand beautiful year an our set We're more Because going that in to focused number. right stores really building more

may any your of competition estimated the kind in retail on guys you some impact having be of sales Have Okay. markets?

perhaps bit I same. then we as the highlighted more had had is The names as a where markets have one a we've at that really store to competitor is John that's this we've And presence perspective, the all just that can as John it's where to. looked a we have markets markets, we giving from. a don't market But that Yeah. handful in point competitive one we've are short-lived. impact that at we little really point we looked there's not of from could said, and of store without impact that impact share. of market -- are that as competitors saturation as that is Chris, What sustained a a seen more all not measured. And mean impact see the big has

like competitors. Honey for this? when this I stores something. market. out XX of other looked the personal a have to they she I of our resonates and only taking stores was there -- you you and yes, one I'm in aware sign would anybody own and I'm And at that will Like wife switch want here you me up. anyway. I was was ever of give remain This And competitive a anecdote. or backyard in Tucson wash two our carwash I she guys with evening. anonymous me drive was goes why respect But can my with give a this Chris, asleep or at are aware going goes, they have go there And one in the just you Chris

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or every few market and the And there's share no presence fight room no market. market ever we're share. XX% here. taking almost leader for with for always X There's in that our any to own XX% going our not Nobody, be going in and to We're a We're to NSA one increase so if will. to again, in players three going share. one hubris exceptions good not every player

one curious of of or I new to just sites design last even able And change just then one. helpful. That's locations. some maybe the are Thanks. you choose was the greenfield

see? higher UWC than members the you memberships So they much gate come typical the with out XXXX potential have of to the

Yeah. That's great a question.

have today, guess business are dedicated almost and XX% launch the it's But lane to you a first -- where person of again, so is very to to but feel on not membership how screw of stations And get one again less set front two retail are to store, a the them prioritizing that's I of everyone and up design lanes so we experience our from into -- and loading forcing their in. our three is we end we're the for you're on that with lane because payment make where UWC assignments unintended vehicles really focus that membership when is the doing to actually the up technically retail for we're from lanes your to opposite But and those it them not open all just retail enjoyable XX% lane very get-go, special. guy make a that retail.

Great. Thanks.

Please Liz will go of from Bank come with ahead. Suzuki question next America. The

you. Thank Great.

a question just the operating on So expense. store

costs ongoing, gave higher color utility with just we helpful those those are You how And budgeting for of service or some on to then impact forward? rates costs should the you expect maintenance to be rent. and regard going costs,

it's question. good Lisa, Yes, a

maintenance rent up piece you that bit environment, utilities break makes seen But in pressure, other it a utilities that as store look is but of the expect as pressure services So we that we while We the so moderate it there. just little as year it byproduct overall the services, at think have mind, lessen small you a continuing operating amount. percentage year. keep were mean, the of the to bigger ever half we I where down second a down, continue as ago. a of maintenance coming The is from and to a do some inflationary expense, about

about more you order comp should point Got leverage it. like your is? we of now to in then your just to growth what what level on do And and in operating reach rent. need then How paying expenses? you're the comp And think leverage sale-leaseback strategy,

Yes.

Just have XX the by some as leasebacks seen car got one clarification rates. meaningful because we've driven leases this have on increased we pressure, we've fact year. wash not the year not that more fact last primarily we rent, to as seen it's pressure sale that more there. cap Where compared The the it's

number not rate. the So cap leases of it's incremental the

when We them best, of its not have it just widen, from basis at seen the rent year our But driver ago. the the best XX points increase. a at about meaningful over or that's call market we were was

you. Thank Great.

Capital Instructions] next ahead. will question with Simeon [Operator Please come from go BMO Markets. Seidel Our

guys strategy kind of I and continuing do Hi. been how retail questions new have cadence Simeon. I I John focused. on broader the that kind and asked taking are those ramp over or economics? slower do Thanks but our that the few greenfield little openings and first this And mind. greenfield This the of earlier, a you Most unit you don't is Garrett if my the guess, normalized a within XX year about guess, for of kind getting of thing very greenfields have first Klingshirn of but of obviously that to been last touched out on a of to to answered, units so for have question. follow-ups a there context has XX think prioritizing on of opened, the year? the you keeping heavy

No.

and So, we with short just they that they're we're new very opening. are is stores strength I'll say are expectations. with And that aggregate, very answer our pleased to how happy question in very, opening are your and our exceeding

either the just bit And for to to of see it's can want and envelope a always grow store manifests at build the about to to the we we openings. do want to a accelerate us of time quicker further act, and comment same continue house my of what because experience. we of the overheat rate. that really But we So grow juggling back don't a that emboldening And down or little to cards. all push double too pace we is where us new customer ultimately at a quality, in quickly

watered that units degree over time. we and down of they're we And to. up expect the them not so throw executing to then gets Everything kind if

management one most and fast fast the challenging continuously rate recalibrate I think, standpoint for how to growth is at a it's grow So that scaling clip. trying quickly any not And we're enough. company or arguably very too from a of is quicker of growth that things is fast that's

stores now awesome get is we a the would number XX that week. that XX And can our for us. but would a be add maybe right then So to path If this be eclipse month or is store a great to store to goal a year.

see kind kind side. scheduling follow-up, the you has kind highlighted on one mind The benefits keep in and -- if -- anything side. that chemical lap can and there? on few there is quarters, you're point few improve. you just with looking how should Do the impressive the there guess to for just cost seen curious, there to done maybe here you I'm we going have opportunities in labor of to guys in as don't of side well the areas I that mind? thinking happy there in Is chemical guys the and we're And great. always this you've I'm been and vertical sure That's are last are efficiencies further Okay. or control tweaking work of and more really you've the guys quarters integration a

become about going is I of things in look to less cost And those we're having making management walk this said cars efficient, into the already mean, mean, basically I that we for what how containment built what so as to we've can to that and superior we opportunities that locked is from Garrett always guidance not tight having wash that's rope the to -- customer sure continue experience. is more and a that, provide labor one on but we're with consumer and experience. the we've a realized we more always compromise think

Jed. Yes. said, Well

line through margin I lens. we our driven have folks expansion I'm of and at contraction at a look an productivity top by questions lot been our will margins look and look engagement cost lens. it surprised at when but there no questions, margin a look was lens through and at We think we a labor labor when

we with more an again, so cars treat And then more offer do them well. comprehensive people And as delivering that exceptional and benefits, more less washing happy them people to pay but and we're we're experience.

that's So committed and formula winning that. us a been for to we're

people that shareholders you proven pay out well deliver outsized and can we've also And for return our over time. so

Appreciate for questions. you guys. so much that our taking Thank

This Mr. concludes John back sir. the Please go to to our over for remarks. any like question-and-answer Lai turn session. I closing would ahead conference

values are on. of as Okay. Car the call. the give to I a joining and us opening for expect a everyone extremely was to thanks where Mister weather report optimistic for want to comments shout and we tougher we Wash, This the But Well, our about sit. future we quarter again are normalize in long we very our We've position, people. importantly big out tails stated working as who with most all economics an excellence. experience. a history of and level in be exceptional amazingly members, an a that their feel leadership operational to fortunate culture organization of customer and off delivering We team to a got strong

grow scale guys. we in opportunity the future. that and to lines continue us sight and very to are and is company, of to So, tangible our about new our in heights front and Thank you optimistic real

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

may You now disconnect.