Mister Car Wash (MCW) 3 Aug 232023 Q2 Earnings call transcript

Good afternoon, and welcome to Mister Car Wash's Conference Call to discuss Financial Results for the Second Quarter Ending June 30 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 John Lai, Chairperson and Chief Executive Officer; and Jed Gold, Chief Financial Officer. have to formal questions. Jed open we and call the John made remarks, their will After

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

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

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

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

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

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

store a for second afternoon, We and call. XXXX quarter territory. had margins into accelerated Good QX everyone where earnings our joining positive you thank comp Operating sales quarter-over-quarter. solid improved

and Wash officially Our our remain began resilient Unlimited Titanium we incredibly program the program. rollout of

stores Angeles We states. total were one fractionally. $XXX acquisition July, count EBITDA acquired Los bringing in came in closed up million. nine stores to XX store XXX Adjusted store grew a million. we the X% sales sales our five-store And to For quarter, at $XX new in in location. Comp on and opened greenfield

capture beginning the the of Club new to XXX,XXX and for member this underscoring nearly and across as predictable today, and retention second Subscription stream the rollout. of are regions Wash encouraging. the our in results been flow. recurring in the half revenue strong cash revenue the strength continues member our stores quarter with perform year and we've over and official member a and And Unlimited million to mark, business. of have XXX well eight We continues accounted XX% members UWC of the added approaching Titanium provide X.X in marked and first program rates. launched Our early-stage resilience of QX

haven't start For of with to opportunity this those Titanium me that had experience the allow efficacy the product. to

is is on proprietary panel against vehicle mirror to your is improves brilliant you're looking on and the has titanium see at in to more three Our Titanium formula so the way only car paint. describe the your the the finish used be to effect as side could imagine in finish face produces best that than that times which reflection. a corrosion anything protection your seen not active of The the but mirror-like we've a market,

It's that shiny.

the reflection In fact in to When who at Macy lab so barking door I in bark, of thought wrong. true story. Last her my investigate, was named going I crazy car, found the weekend rarely wife's our over was I went side mainly Macy something yellow panel. the herself garage

Titanium worth, it's Macy passed digress. what of the for but test, So harder I bars the one

to tunnel washed. writing get IMAX through just our the your in unlike in it make visually to an Titanium feeling the we make show which more level, the a unique and you're interactive it aren't the a takes IMAX like color watching developed arch three movie. being car thoroughly to signage, show; minutes of in show it to the even firsthand it whole But they're entertained movie, and and with experience feel new Back element the an immersive, application customers lights, pleasing tunnel takes

provide introduced choice members a we've believe our With repositioned and launch, earnings. which will and package have value, menu and to lifting to with a revenues also premium effect more anchor our this new we topside

out and we're limb our to Titanium at plan. still early members going it's have go XX% say in on we that While the least of a expect over to time

on, shout out to big installed like to maintenance to groups unsung facility give getting our teams time been our the Before you I company, one of move over who've a working amazing I'd hero of cheers side guys. Titanium

growth. unit new to Switching

approximately operations Our remain we've as I the greenfield in out hopper we'll stores development each scale our real we comfortable only install foot for and year is in with the another who that starting are store expansion see six mode, think teams to and comping opening target profitable estate the not firmly our and we're greenfield stronger on as but our builds year-to-date better, locations and as a with increase our year one, continue successive are When are benefits months up and our new have XX over the existing scale to vision. build. effect ramping the and shout build of next growth help teams, be new to new about in construction pedal XX. fulfill really XXXX, stores. our opened teams, IT All of and get than full we beautifully our faster I'd what give and like of to flywheel big to all we capacity

in shared more as in opportunistic, we've position calls, seen and move while on bolster we with adjacent multiples we new M&A markets continuing disciplined a and we've as reasonable moderation and existing markets a standpoint, our becoming assess an to valuations to remain From bit into. previous

will one of our area through us, greenfield we ton us that M&A, California good upside. a believe and more Angeles platform Los that that serves to productive of to in in tend Los our enter like Angeles, entry allow into Express and type market. we position X-store that acquisition to as acquisition a beachhead, a is desirable example states, new latest Our a is a a in Cruisers the of way of has firmly expand Chain an

the I dry heat, over across we're just Before for experiencing the even heat to I to turn talk a it's you about where we're record that Tucson, country. to on Jed, want track from though across not break the the speaking months we're longest Today, last it's it just days to degree been July, the up and the hottest record of have XXX on plus of country, and of Tucson. June no in the consecutive is letting decade streak one signs and August showing

throughout safe I members, extra As that everyone there our we're the a heat-related signs to people-centric let and that of properly to of breaks prioritized illnesses, hydrated company, taking make steps, they're to and fresh. on sure safety were men we've everyone's to want educated the always opportunity team this Mister, that know heat, and want I women given work who of smiles special the us the to the take their make thank the and day people bring help tirelessly company to we keep are. worked to and our brave

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

second we what and future you, optimistic Thank good Mister. the holds John about a for afternoon, quarter everyone. had and we remain good Overall,

an the let Titanium our Before review I on you details results, offering. of update second me new our quarter give

blowers an to with superior customers. and provide implemented today, this offering over we excited of stores, some report the along have just even reconfiguring are includes experience Titanium more wash to Titanium as in improvement for We that rents XXX technology, our

Titanium plan, year. to be now by March stores our expect of implementation We and next of are offering ahead all

to promotional trial and testing We various are and refining drive offers help adoption.

mix period. upon least this levels We offerings we represent after will because Based impact. meaningfully rate higher the it in year and at could minimal and expect, have post higher strategy, but The a subscription believe be a churn promotional likely we will expires, will of term. period timing longer promotional that XX% pricing Titanium our be and result EBITDA the the of the to multiyear the revenue slightly of UWC membership the eventually will churn but by promotional analysis, rollouts impact accretive this next believe initial offset be and could year

net and the of remained X.X%. base nearly the store members. performance quarter churn Now, between UWC the core On split quarter, we sales XX.X%, in of The with the approximately revenue basis, of sales ranges. year-over-year within quarter. the turning we Total members XX,XXX added business second the memberships sales UWC in of members number the to X.X% comparable wash increased the second increased total remained the and represented and XX% premium stable and results finished and increased subscription a very rates X.X million quarter. historic

performance the in On locations second unit one Exterior side, remains EBITDA margins volumes of under new strong, greenfield XX% four-wall and million and XX% mature years. approximately greenfield our existing development of in Express we acquired ramping to $X.X our store The toward quarter. average of three opened the nine

the optimizing are investments side expenses remain expense focused we the managing of On better and on business, making. the we

productivity we we with experience of improvements. partially to offsetting some While continue are increases, some these

points stock-based The XX.X%. of are basis XX%. basis G&A as XX operating expense revenue, to to main expense percentage XX to basis to total operating increased increased chemicals drivers Other compensation XXX points labor decreased Excluding a store points basis XX.X% and and increased expenses XXX points XX.X%.

expenses primarily line we the X%. to additional wash from store same time have better leasebacks during the fact labor year, increases XX average the from increased compared chemicals completed and labor regional and of optimizing car year. last wage operating infrastructure offset benefited labor The Other labor leases that hourly to scheduling, last and primarily more the due sale

XX.X% to for increased $XX.X maintenance rates the service inflationary continued quarter. million a and pressure. to cash As rent result, some experience costs, expense Utility also

as XX.X% by stock-based previous to offset excluding areas such support and development was continued marketing, growth corporate insurances expense both by increased construction and and in expenses, other investments partially G&A investments. lower compensation driven

of proceeds faster into favorable due million resulting closing the expiration last to $X.X of and second leasebacks the business. the $XX.X to higher balance interest to the It the increased rates from was cash interest slightly on hedge the our due quarter, of rate pace reinvesting from higher year and During the timing year. expectations to interest sale million compared expense last back

second GAAP Our related to rate year awards XXXX. exercised for the quarter to was tax stock decrease XX% related year. to estimated effective of due was expense reported XX.X% last with primarily the our the the a state quarter benefit compared benefit employee to change The tax this second and compared in the for

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

from Second up sequentially was quarter X.X% Adjusted at high EBITDA margin $XX.X EBITDA first quarter. remained adjusted XX.X%. the million,

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

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

rate involving quarter for a in second Demand a total remains XX record consideration the the of XX $XX aggregate for despite million. transactions wash We environment. completed interest of leasebacks locations strong the rising sale car sale-leaseback

are we how about and guidance around the comments few year. thinking a make me let Lastly,

performance half first the line Our with our end expectations. of low was in

Our subscription well. business performed

minimal, strategy. release. possible our However, range the stance are retail summary our the forecast, now but outcomes. Titanium year. more of the timing ranges causing A these the the of in us on a shifting assumptions remain starting half we by back outlook year side and relatively guidance into basic our given discussed Net-net, the full soft our can cautious to of business are we some in factor earnings of the for time, the promotional down be same for updating to At found slightly slightly XXXX changes the take and tightening remained

I entire solid to make the and closing, and had continue for initiatives. our in Car want strategic work and customers In quarter good second and hard we to thank day business commitment to against Mister progress Wash out. a team their day our

your are we happy to that, With take questions.

Your gentlemen, first begin will from Ladies now Heinbockel Guggenheim and [Operator the Please John question we from Instructions] the ahead. question-and-answer you. Securities. line Thank comes go of session.

haven't. lot wanted Hey you're right, guys. clustering, real location, densification you've and sort I like per of I and thoughts where work correlation members because and just as Florida achieved would you with versus thoughts a in it your referenced California then a prioritization of to John, guess estate really right on looks where you on start doing there's

to talk maybe that. So,

Yes.

in in we each retail one share certain those a roughly have when select markets. assess average, but about more our we of markets, market enjoy So and on we share trade areas XX% position the XX%

with elevated stronger. have that network the see we to within drive options in and each more that more a Club convenient happens and supports store and where you Wash makes the also our program one a you the hypothesis is Unlimited if anywhere that, are of city, that was believe We AUVs effect it businesses program, just there our our XX-minute a

all an the boats this rise so tide. And with

our supporting we're XX% MSAs of end, that of in. around XX% that's that each to So to average strategy share taking kind our the on in

MSAs. combine into think up the to at at pushing we XX and we that we that and is the get right So are when hard looking a look different ones now them kind underpenetrated markets of them level to appropriate. We're

look right as a at Now, sort little gauge environment. cycled this consumer right? follow-up. work think two. I that, you has weak, it bit do The how Maybe you bring business no on just to magic starting in, get we business well, at that curious, guess, of retail part that still will falls think When probably about been less there's the Okay. a you a in How And bullet less them promotion I'm challenged? engaged to year -- least I of we're about into out the first. you think

absolutely right. you're Yes,

that want So, that But months our are this the stimulate unnecessarily business we've and very chase in one, we also we're in thankful point, close the traffic And dilute XX% very revenues in to built to in softness. offers. some our and various subscription. and retail previous have to up has I stores. to our seen of quest don't demand to to think attempted drive the side your try try with to our or conservative to But we're approach discounting revenues promotional

you for the down trade customers is incremental unnecessarily and fast-paced customer. And is think where our customer, that retailer in in that I of a an and challenge anonymous discount bulk retailer the to try quest existing that us to them environment that are a any get particularly can

we're very So cautious.

and one way We're we the revenues, continue one we I on And some that at we but has have not actually the that the related visit. date logic, discounts, it not support we've non-discount we don't that of and actually that cracked of a kind that some is think messaging seen through and And focused measured haven't but effective very been outperformed this discounts. our fact the farm defies is of promotions does it ensuring that which experiment. that in thing give through the to away branding built end to it incremental but dilute of day do code, business in the the

.

a built fashioned good in We've old way.

having can discount drive that into promotional be slippery And activity, which so traffic what is as think you to dependent a slope to really not quarter-over-quarter, to is again you result if upon we're a get -- that year-over-year treadmill of linked discount offer.

to Yes. that a add And John to just little bit.

retail did trends double look retail We those QX. high basis, you QX a digits we down improvement in then see on in As in trends. digits the QX did relative to see down at single year-over-year QX, were we

Okay. Thank you.

ahead. from Your line comes Gutman Morgan next question the Stanley. go of Please from Simeon

Hey, good morning. John, afternoon. good Jed, sorry,

You blamed weather. mentioned the the don't heat you and weakness on think I any of

know -- could that if in holdback. anything quarter about I of broader there other you curious would the maybe during second a talk talk don't the that's quarter? I occurring country in context then But rest So the I'm it the was is if any you about of in and faced to the the headwinds heat

called of why sales from an weather bad patterns. and but QX. weather first I'll in is benefit of in neutral the impact with impact, results offsets We've the it there geographically the out Simeon, diverse. weather XX% take we further the was of some Yes, weather. insulates markets got the our net-net weather. good is from Net-net on the that This other weather quarter then the part being no which markets QX those us question where anomaly during to subscription on being

leasebacks? leasebacks, you're your sale we're then at how hearing can existing with the which is to And paying rents leasebacks. talk about the buyer sale look, those it -- your you relative I more and sale and or then about just seller -- ending the evolving? if then those rates terms the Curious and are shape who's the Okay. better that's more out and

Yes.

to seeing look And our in strong rate on X% We proceeds think that of in really that way quarter, particularly there of transactions. we is at during and cap the us. construction to XXXX million building the bid. leasebacks be about found reported $XX be the number And sale sale-leaseback market from continues for range. X%, demand our recently looking we a So the land. sale and good build a low to we're sale in do continued for kind And we of the the record those gross leaseback new leasebacks builds as

ourselves we make keeping rent. And we're or and excess an ample time to we that the then cushion. sure tracking the sure giving consistent over our not some relatively to just well overall lease on coverage targeted leverage with as we're business basis, adjusted ratios have business are levering make internal also that But burdening with

you. Thank

Okay. Good luck.

Thank you.

next the Michael Your from of Lasser question from UBS. Please ahead. comes go line

evening. question. lot of Thanks taking my Good a

of competitors car which view One is wash their view your becoming on the that that as is is trend sector more noted is competitive, your real well? weighing

of that was of nothing King Remember kid, on to play that the first competition we guy new knock off were is top the a tried all, the when to you Michael, Hey, us. mountain? you and game Hill, of back

feels weighing the So to that station.

is world targeting In steal last Mister for our and the years to several try is everyone where attempted share.

we new them radius. competitor nothing have is us. that utmost look We the our of competition many for. within respect at stores competitors And XX% have our a over listen a that we three-mile estimate formidable portfolio to So of are

numbers the at a end highly We're and it and experience. very been customers for maintaining and of I an retaining or market street the delivering and on share winning built we've competitive is a So what the we're customer right? in we've out our we're day themselves think loyal And speak duking performing customer exceptional base.

be on I the more will evidence they're loyal in happening? market up emulate loyal. those business there mean a follow respond consumers as retail membership Is probably would that. you going a just that's happens are wash be as going players to could tied that to how model where there the carwash remain it's who industry to case which the John be members just more become organization in and more to difficult any If And interested Is more if more means in consolidated? going to are car that will up a that particular it as attract

Yes.

we're So that. the members I And think to Car materially respect Park the membership think years from U.S. with the enjoys. industry I away underpenetrated model many and how currently is total

as this to part care change vehicle treat industry collectively car a opportunity today. if we their of from So an a in massive way while have regular that's taking And will washing people happening the you routine. to their once

important. But having And is think competitor. cost you quicker is on this something there's hassle I into factor somebody everybody. goal is goal I by switch shared convert or did a that really over membership and to a a really, can the of touch almost guess there to that's that switching a you And plans

So it's as members promise. get many as to possible, have as deliver but your upon and you to brand try a quest quickly

a customer switching the clean over service, the Michael that upfront with the great there's this basic And putting fees, and reality prohibitive. no not so There's if you're superior fashion out costs time are it folks operator. fees. and go cancellation a to will car it is membership speedy as consistently doing sounds in no doing not as And

And has bar programs our get model. out And in emulated everyone threshold people can of low of kind low so quickly. relatively and

That's they Unlike hoops you through where our I'll to make space cancel. pick approach. not jump on the gym

month-in to because have month-out. end we so. earned we're continue members our to very the business the our earn very, we we've at So stable And day, business why that's have thankful that rates retention of and that remained and do

of Jed. quick There's just on is and add me been question the a Let focus lot one this impact Titanium. for of follow-up

XXX in rolled said You locations. that out it's

that. so factored now little more order sounds but having like indicated in in it You've a that you're promotional also it or be you've drive to to

So you Titanium out you offer Titanium lift just earnings sales are what and roll give can locations? as you us -- the these in seeing these

introductory what do faster is up. just some surprise. just Michael clarification. mix isn't as that at offer trying regular of it a prices. that membership one seen trade grow It overall We're than mean, we kind promotional a I a we've offer to to organically able rate and at Yes. incent to

a So it's really surprise. not

sticky Being you and them just a doesn't subscription -- the of that Titanium got it to happen business these overnight. customers on tend educate benefits be takes and to

XXXX and XX roll toward Titanium we is the the you lift a earnings basis to of comp we benefit tail as end we've from the we points when the base titanium sales and this about built of this basis and continue build what perspective So to think will titanium XX in is see year regular to where membership price. them build real Titanium in points

you. Thank

question ahead. from Sandler. next line of go Your from Peter Please Piper comes Keith the

this the Hi. off number you. greenfield competitive been have clearly a quite years the Good John, going to the industry and On to market is away afternoon, chatter sale moved there we'll last available as guess it seem from greenfield in is I capital same leaseback. growth slow with rates openings the At for kind less for just XXXX of questions. of -- two everyone. has to at that front Thanks be my across higher taking is looking start time, some acquisitions. now interest does

with bit you there discussions? industry to terms could there the of XX your months? competitive out growth over seeing you a slowdown XX are what of in months So a think this next Do be

Yes.

you're think I spot on. So

constrained some tighter with they've to actually and capital higher standards. back a operators incremental We and point plans environment there paring their that We're and your rate are expect Coupled growth out been new of growth to seeking unit interest moderate. seeing out lending lot are capital.

several this a years there's bit the that don't is slowdown. think that probably a healthy I of that in sustainable it's So of last little rate growth been and has

then in in you we've industry the of rate? change impacting That's if out it's the the slowdown usage the members. Okay. usage with been one And curious has or there and to guys just subscription If I'm heard your hear. things is any good

Yeah.

You're engagement. and hitting those we our utilization one utilization, haven't But in and member again is probably leading of indicators that look program, we at it's most on the to use seen UWC reduction metric we the important inside which term churn. any

the months. So that, it hot about number. people fact great are in still these summer feel We enjoying that

coupled So again and at stable. pre -- at mix that we've with sliced remained been program is looked premium There's looking different Titanium resilient. has but and our this all it thing and And through the no trade unbelievably individual we've diced down. has cohorts this remained membership

hear. to Jed. Great you, and Thank Okay. John

you. Thank

Chris Your Stifel. of from O'Cull next line question go ahead. comes from Please the

Yeah. of curious Thanks. target I for kind of question kind package. seeing may platinum if wash. Jed any take from you're you the Titanium a standard? afternoon, expectation understand trying was sales new shift just as for XX% the to the be which Good had base package have mix an to now mix from new guys. base I whether the that about platinum the viewed maybe membership the I'm to

early good Chris, those them there lean and just an focus listen At of is on hitting member year Titanium important little early more second focus you're question. and opportunity think the and half driving take on driving but that to year. now point, mix days. on the into this to view We have the right as a be it's is we're we that trade next to bit able that's that's mix. platinum. base Titanium opportunity also that something members it's a And about as an this we still that But going

mix seeing you for the are what in seeing terms retail you Are Titanium? of

Yeah.

mix the we're lift. healthy $X a about at seeing have get So people good as in and seeing sales Titanium retail into markets indicator coming the to you UWC. that wash lead we're trade are there to a a which in as When per well as trying and win uptake view retail customers we look

on. I'll pass it Okay. That's Thanks, great.

Instructions] you. BMO of Simeon Thank [Operator line from Siegel comes ahead. next Please question Your Capital the go Markets. from

for afternoon. Good of us into is One half in it's kind your This of Simeon. to same-store more kind new on you're of of And Tristan little how thoughts also, there? questions. terms the into maybe or you economy insight guidance? give how sales a and there in you're terms back more thinking a the cadence what is just maybe relation of can about you're your then anything whether thinking little pricing Two

Yeah.

listen our XXXX So when to we February, comp. initial a we at arrive X% out for in X% for accounted that range to laid outcomes wide guidance

in last then to was base. also first -- year end As We We the of greenfields and the range bit a little us heard and say this first then the that toward range half within expect the end down as of you've second comps of the low down. the flat store that slightly natural year. picked the did the year in tailwind be toward up in to the the still the half half in to high of range getting in just half this factored and of softer serving lap ramp second have comp XX comp

half And retail end see a the prudent first do bit of was little low as what outcomes. thought second our account range see to of half while assumption at continue that potential we likely it And expectations we to softer we a for retail we modify with to softness, more had what that than was expected.

Titanium. expectations the lift range. modest includes X% the from now our low compared original digits X% XX to comps Our to in assumes basis a second half single this And point in now to XX

a Titanium then, could expectation? XX% target The for I if Thank one you. more of right. just And that housekeeping. line All time you to kind did give

get year build is What XX% take trade -- just going to it's least said that takes people we at to to and least Titanium. it saying we're a awareness XX% about -- into at and

it's after it a year those particular So launches in stores.

we So said as this will to the expect prepared in launch time. QX we of a end of introduction tailwind with rolling be out remarks, Titanium the XXXX. bit of were in I over by as And done implementation a and be the little my

you. Thank it. Got Okay.

Thank you.

from go Your next is Kleber live. line Baird. of Please from comes ahead. Excuse Mr. ahead. the question me, now Kleber, Justin your go line Please

It's guys. sorry, Pete Hi, on for Justin.

or Just right is sticking thinking kind that's right Just give penetration. but of program. at is that with us that it's number? the benchmark? right kind a Titanium the not think at sense at of of XX% why curious XX% the the just your you of why you Can XX% kind how high you least to as arrived least The low or

It's the early would we optimize still most as it are tried that membership quickly a to make pricing the about to benchmark. to hone that discounting days, what introductory to really a think up We've things different and sure handful sense, Yes. makes a or it's of can couple Titanium run as without Titanium have in markets grow that pricing as people great how we anyways. of long that traded just

pricing So it's Titanium off and pricing. of based introductory of introductory data cycle have regular rolled pricing on a the the limited to of run number full that then points

we what ground with a Jed Yes. more basis. premium And at widen it's soft through plan, point pricing pricing in on question we from staying I do the will mean look percentage spectrum market-specific still little provide just a to what choices look price of if standpoint, that And right? add this offer a to we're more a this be. ultimate respect to, and point I So price as can texture really to to

is And yet. nothing in stone locked just so

of at manage does the we're XX% percentage wide a down our of day of really we offering the looking So can by variety customers to what. pricing it filling maximize boil with to choices. profitability while that but end And

that just on back existing to what's question. base. members, X.X opportunity these not It's XX a up. XX more basis platinum, the color in build factored existing little million going to it's huge into points to that to just XX% in earlier members XX% that those trade got We've And bit UWC

it yet much Titanium. and coming – believe able much And trade In as because that to we up to new put we really of behind as in being of addition customers into can. a retail lot we through trade factored just haven't we focus haven't them

just there. Got environment, it. of to cost Thanks. inflation the That's levels helpful. still you some mentioned pivoting And over out then

Just you curious think wages boxes, chemicals the X%. I key utilities, said

the outlook a as those the bit inflation get stabilization, is about the of us second you're or is to here. Thank for while half you of of think kind just going kind you. you'll to a year? of what thinking buckets Do with little Just be

Yes.

you labor introduced. the we about have benefit models optimization staffing the new labor that and been think from So the continue to if

in of We this will to start anniversary those year. QX

and model. the just expense. about it's timing the will a had closer of million looks expense $XX accelerated We communicated million think to headwind due to to the on in on close you year As rent $XX sale going a we've increase the originally we bit that fact the when It be these rent leasebacks. little a be to that some like

of So headwind. that bit little will more a be a

with it flex percentage we what to into sales in then on and of go that starting utilities we with saw line be we G&A services, in G&A as we and in line expect And XXXX. those really leverage QX. do a about think how we similar, be we experienced And in focus as QX that maintenance what to expect we further G&A to as but

Thank so you much. Great.

like back any no over I'd for closing at turn Thank Mr. Lai you. remarks. There to further this questions the are time. now to call

the for everyone thanks Well, joining call.

more our our We've the we're continue dive even on future. about positioned very value starts into Thank keep place for the heights amazing improving and energized you. to of half and building, As customers. XXXX, with optimistic we're we to foundation even determined to greater people scale got that we adding well and keep to in are an keep on second on

today. and a Ladies your and participating this lovely concludes that We call gentlemen, conference thank for sir. you, Thank you lines. Have you disconnect your please for ask day.