Mister Car Wash (MCW) 1 May 242024 Q1 Earnings call transcript

Good afternoon, and welcome to Mister Car Wash's conference call to discuss financial results for the first quarter ending March 31, 2024. [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, Chairman 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.

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

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

these under by they XX-K the the contained update reports. While Please company's statements or in no disclaimer annual to required unless the the are company applicable so law review in latest do regulations. future, choose statements obligation XX-Q may forward-looking and to

may be over to to Exchange go now call the such the time turn Commission. John I As Lai. and with filings updated ahead. Mr. Please Securities factors other will in time from

Good afternoon, quarter call. first joining and for thank our earnings you

quarter the Our previous of the line in first expectations and in quarter. overall we our saw trends performance with continuation a the were was what in

and quarter Comp members. stores quarter, and ended sales greenfield increased members X% the X.X EBITDA we with We the to million. X added increased over million to XXX sales locations. new $XX store UWC In increased X% first $XXX quarter the million. X% XX,XXX Adjusted opened with and ended

growth, but softer has quarter, that's and of which more a income a cohort been XX% been retail remains driven under of intentional been for lower offset Our incredibly Subscription which accounted a greenfield sales competition, in increased business, the combination by cannibalization pressure. has customer environment, by first this resilient, about

in execute The get with is reason value, tremendous we because you efficiency and AUVs why out industry-leading and offer we fast. enjoy

elevated proposition delivered cherry value our a team delivering shiny amazing and customer service begins dry car the clean the from with Our is top on members.

is Penetration first momentum the Mister The customers. that the from above at Wash grow report seeing and the are our and the we're level of quarter. happy to rollout headline we're continuing incredible to Car the ongoing experiencing from levels we're response progression of after I'm the Titanium end that XX% and

] unnecessarily are process price measured of the settled expect on we're promotions that and throughout beginning healthy see our across and $XX.XX to the so we points, continue a that this After off, are now rolling to the rattle a remainder lift of in per we've revenue to Titanium in various [ customers. year. and As testing in standardizing regions don't all way deliberate member

back price are a today. have growing for at and the shine service We of superior step and is offer our premium the know taken our in market Titanium, and and offerings. With and level of packages anything we a Platinum large that market Titanium products wash and there protection to launch that looked a

Platinum to the markets, to but package, our customers $XX.XX room program simultaneously our some will had most migrate trade to the it we believe we result, Titanium. gap decreases [indiscernible] of incent programs, Platinum up pricing reinforces a only in raising nature premium As between help which Platinum the not to X to

members. is premium uptick to we from in Titanium it XX%, lift our the after a slight found be elasticity you of X% churn, our $XX.XX north tested penetration in highly mix, with coming Platinum our factor accretive. When we about now of and When even base of

flat historic of existing frequency nicely capture churn consistent. members rates perform wash Club Wash relatively highs, program remaining at Unlimited core Our with to and continues

member existing result revenue per base, members we've member in value noted, to in seen modest previously growth were us this member growing more upgrading got lifetime but our prioritize which improvements year, we're will the on has As elected super who net focusing excited.

and to opportunity is our base Zooming plans strong. out, grow we market subscription believe still for member is our the underpenetrated

unit path and greenfields X approximately which this any we're good a for a can a we QX. remain new on year. standpoint, healthy growth a with We that From confident record is QX, cadence XX in open

and growing strength open, markets. existing to Our our new we extending stores a we continue and network and densify options are opening our to share. value proposition for members, market store our with moat while strengthening each effect with simultaneously us offer And more create our helping competitive

front, of and fills who efforts people knowledge for Vice Mills, in President digital and insights Target of our look I'm advance Mister across customer around subscription. to seat omnichannel a customer appointment wealth of program On loyalty engagement, announce thrilled we our background a Matt's General experience critical [indiscernible] new and acquisition, the brings and Walgreens to the development. Marketing, strategy, as

financial then like fact of manager while stores allowing talented of We're triple double the mentality to to we'll and of who and receive are the participate core which every each and our restricted of form units, many need company. strengthens amazing the members our field equity team, team general for look success of double to our number leadership in which proud our create hungry them entrepreneurial stock for of so a of the will in our footprint, we that triple ownership opportunities As spirit more.

lives have I'm for we to extremely because of excited And future proud better. change about of what the and that, extremely our ahead. built continue We

as all becoming the the world. so high us and I'd our financial the more results. around take representing working to so our in well I'll mission call of over turn that, Jed also men we to commentary preeminent carwash women now like and give big fulfill hard this operator to to to With provide the opportunity a are who five

and everybody. afternoon, John, good you, Thank

previous consistent were saw what As John the trends expectations first our were with we line relatively indicated, with quarter in the results the in in and quarter.

we numbers. the few Let on run through highlights before me touch a

and our strong remains remained levels within business Subscription range. churn core historic Our

The expected We of the penetration in are new of our the we ran we end promotions very quarter, confident than we and target our XX% with and May, quarter to it traded meeting faster the that first second package, rolling April exceeding pleased in of customers free forward. in and in first be the expect Titanium we into performance or the Titanium see are Titanium are off going promotion by quarter. largely

pressure side more the more be where pronounced to lower-income on in continued periods, to consumers prior that was stores may and the see areas slightly retail pressure are of Similar business the we constrained. in

depending are and encouraged the open to results during a years. about our solid, our we Each returns paybacks and XX ability solid market, by on seeing of XX% the X of greenfield experiencing are to we in of continue Our XXXX greenfield little pipeline cash year cash is approximately locations but ramps see year. we under on locations differently the X

Greenfield expansion continues of development, use to our and markets densifying into and highest adjoining capital. be the best

we first me With through Finally, quarter, and which drive run us SG&A expenses managed that adjusted let EBITDA the and the lever you allowed quarter to numbers. levels. said, strong our during tightly cash flow

number last and the basis, year. increased first quarter. wash we sales comparable or the first store added to revenues net net UWC During members compared sales by total X% of X% UWC On of X%. increased a nearly the and members XXX,XXX XX,XXX UWC year-over-year new members XX% quarter, cells represented in increased

$XX Adjusted margin up quarter. income Adjusted share, income net at adds compensation million, EBITDA Adjusted in and and net was were first non-core flat and stock-based certain remained X% of XX.X%. million diluted per EBITDA $XX the back year. which expenses adjusted respectively, operating the quarter from $X.XX, last

we growth and the the of side stock-based million expenses onetime Total On in quarter and we development and of support in finding taxes related professional focused included business. $X costs of expense optimizing and long-term remain investments efficiencies and $XXX the fees. $X the on to the making were are compensation million million business, the and

these to expense total flat XX.X% to were expense The expenses X.X%. drivers of Excluding chemicals operating at decreased was increased G&A XX Other a main and basis store operating basis points increased as XX XX XX.X%. and labor XX.X%. to points basis points items, percentage revenue

on stores primarily ended sourcing the rent last the expenses We year, was driven increase wages, was $XX.X XX in by carwash Commenting higher store other hourly our rent offset cash average little store a an primarily in the labor first The million. increase leasebacks. proprietary chemical of time in from compared expense leases to partially and operating of with and XX% by the our to and efficiencies operate related each further, was same these and to increased expense increase sale increase in more we which and chemicals quarter growth program.

managing expenses million the year to the optimizing interest to rates. was focus structure expense G&A expense on more increased G&A doing million with quarter, last tightly by decrease interest business. The our less $XX higher from in $XX of the In first increased due driven and

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

credit of and we amendments credit Our lien which self-fund and to of basis due first term removed due in revolving $XXX we [ upsizing, XXXX loan our to sheet commitment maturity during million and spread. the of Late expansion. our continue refinance adjustment consisted XX the and ] Both quarter, in balance respectively. million point remains healthy, $XXX agreement, the our completed growth amending extending and XXXX, a first

our Under priced levels, points. current points, plus $XXX and SOFR priced at loan million at facility will at XXX revolving our plus the be term agreement leverage refinanced XXX credit credit SOFR basis newly be our and basis will

The debt company expect We in the a in not interest of growth. increase maturities refinance. result line as liquidity expense transactions and with extend do any Mister's increased

cell of involving quarter the in million. X aggregate for completed $X car X We an first consideration transaction wash leaseback location

leaseback We continue rates healthy market. favorable to at sale the see in demand

the guidance is in for are In press earnings fiscal XXXX, provided conclusion, reiterating we included ranges which full today's release. previously year

business's outlook. the We about are optimistic long-term

car We have anybody operations experience in industry the than the collective best more operating washes management team with else. and

will our team, deliver for shareholder to we're unit value growth business our ready creation any great brand, questions. of and great us that, combination to to and operator, subscription years come. strong The model economics With enable take

[Operator Instructions] of come from Mizuho. first And Bellinger will our David question

And you've us then through roll number. customer? noise weather Can of of from more Any trends the on Titanium as on detail the comp off that some April more any quarter? even how initial and the much seen just off you some adverse changes lower-end with quantification into second, shaved the the promos give

David, thanks for joining.

across not So That a we that soft was said, our or on hitting it board. internally blame never winter numbers have budget missing we a the the saying weather.

climate quickly all that -- that the stores was got and there way. followed northern dumps, X washed was big rain really Our snow X maybe with

it and really the gold, So vehicles. liquid snow blankets for us, is like

did So that without not that, effect, on blaming have the weather. it we're but some

we a into I So was see think, quarter. comp a did when Titanium. driven of quarter. month it by look slightly the when just the being bit you momentum the in quarter. improvement right? David, and the But March above And through was by It saw consistent first we largely comp during store April balance little at average carry quarter. the March throughout the we March pretty sequential comp, the and versus to around month of the highest at that color the look the sales that's saw April, then compared we

As to pick momentum throughout that continue member seeing the we're off, quarter. revenue the roll up per promotions

count. just then a Got follow-up on And it. membership the That's helpful. very

X% up this higher-return quarter. strategy a I T-XXX going after on change there's this the So customer. in been know year-over-year

year? So a a there look for should something and type number mid-single-digit taking through and we as different good growth trends balance is run out? over that the Is Or move account, the of get we further is that just QX QX into as rate.

that members be There's and And think thinking focus model digits. way by little Titanium. of it last membership that grew -- expect got we're year this the year, kind to way trading We Yes, David, more it we we've less range. I a than bit about mid-single-digit would that's low is into double the around right. up that

comes question Guggenheim. John The from Heinbockel next of

in question, have you so, guys try but retail receptive do You John, a that membership. to if you might philosophical cohort, different that? And and feeder a a a the go used do Is I -- offering? there softness different market as thought you execute to right? for a now, directly that maybe given start wanted And that think route always to demographic premium do you be how to that? when right,

Yes. John, good question.

campaigns. and on we're more our really we involved, acquisition. So on just But last the year, brand that we return our this at and we couldn't amount were size and our targeted dollars looking brand towards focusing shifted broader approaches of footprint plan time the building justify awareness we pivoted more And action of to customer the -- through realized given really out spend. driving brand, midway ad

the a focus in membership. still less now into tremendous by of And we give Really we'll the did a say of in we we've is get retail offering them customers them We've great done have mix bringing a great years ourselves a promotion such to pat job a your converting that into job job, that When back though, we did value frequent our door. point, in the in the into a those you them but users such trading door, the and has members. -- done goal over getting great here.

of hopper this And we we've holds now March. that that got very early number deploy but our the right in if expect are true, as so we are continue stage, a promising. And to things

we for to But long earlier we member in take things next very level. our the hit our the very time marketing way is each To enjoying, point the There the because -- regional profile. the we've interesting be on [ to that help a us and thrilled we're basis towards some store-specific as a we Titanium. to we're acquisition. Matt and ] just customer Marakovits by really leader on needed though, team exceeding have and where store a focus call. hope [indiscernible] And of retail a reshift to has the very, will to expectations cases, He's more we're conversion, an are kind Platinum running, Titanium to and the have with share we upgrade really next really, focused some team, to guys ground question, that and this on both mix you have underscore, on that's unique

to follow-up consider I ] [indiscernible] you that's a $XX.XX the as -- timing then if is And as [ Maybe that, [indiscernible] between so, being there room migrating would or to too any What's cute? a premium? on sacred right? guess, and

Yes.

all sacred never, we going offering plan hold to but in say think, environment, this of kind tell for we're used mom that So point, and in at value me, see offering we to in mix, [indiscernible] my off to the are we march as and all are important. to But [indiscernible], is the a now lift expecting markets that we price now. to membership have promotions run forward. Never our

Yes. launched that. a X And that of was John, was as up particular they little more at nuanced -- color April to went just other $XX.XX a Platinum of little X, it time taken bit the XX% Titanium markets. more About stores XX%, $XX.XX had in the bit those around to March the

Peter The next Keith Sandler. question from comes Piper of

at much there's timing the T-XXX, about to been doesn't I a just like under pricing? It that's not how seem there been in the point? [indiscernible] many comping up for want a while. kind T-XXX holding stores guess that now. promo right Platinum. list T-XXX acceleration It's to of understand the maybe X% I And question, this pricing on Is you're are April has on still something

Yes.

were desirous So that the until to. to of were from holding the to promotions mix holding, Peter, with got respect we good We play to we hear in levels keeping holding, getting you.

as comps. numbers, plug we're has quite promotional on frankly, Now that of and pressure And as we of discount the that downward effect there's on offers. exceeding those that more hitting no the kind numbers today, of our those acted pulled

and to see And is forward. us, that going expecting lift so we're that, behind

more more a that's with little we're bit pleased had other Yes. Peter, we Titanium, softness how It's X what piece, there is really just expected. to better think was than we even what performing. during Retail provide mixing color I had expected. than QX

that QX. bit negative a we so slightly the double-digit had It just talked of a call, It the year. modeled same actually just little trend worsened originally during QX bit, on the what we decreased. little And about for softened as the QX in was we saw balance in

softness the that So retail at offsetting that we're Titanium. seeing is upside

makes Yes, to talked are right comping I lot peers guess you there. John, you higher sense. Do you're guess out know of a subscription penetration. being of disproportionately below a impacted now? I operators Okay. I that some lot you feel you a the Or by Obviously, retail. like have

the than little I right a think we bit lot operators a what are of would that is So not. higher But X% now? comping generally, hear

close the the by Yes. XXX talking we'll have we of [indiscernible] of you're of a very network to, stores. end enjoy large -- year, to stores

speaking stage, comps a greenfields to in you're [indiscernible] earlier to [indiscernible] is has have platform of going if the a So of network. their lot mix, that they're that higher

So know, have for we that stores stores data of have our we you of a while, and are do . want around look at been stores coupled When those to any new some trending, you as blended this Jed, how with number, greenfield share mix. the in

Yes.

should support stores, comp comping John look I the right? picking the XXXX XX vintages, greenfield what at store you they're just those performance at performance we of think, Peter, data give talking here, just about If within XX%. look our some vintage, at portfolio So stores. when the to is XX by

we a but base. XX%, store So have larger

. of strong recent comp So these that that other smaller lift XX% isn't significantly seeing pronounced on a as base. may their operators on be newbuilds some as that really store

really underperforming. relative good don't about how competition. we to still feel believe we're So performing We we're actually the

Stifel. O'Cull from comes of question next The Chris

Do sales Or Or additions over understand just you result quarter the added the watermark weather John, slower help the that? quarter UWC think several factors be past fourth a traditionally me quarters? is the issue? retail has other what the of the in of to may year. the program the are members net first lower period from each the high causing been

Yes.

lower are So highs. historic traffic, capture a combination though which our at of us [indiscernible], rates retail gave

we we've amazing member the really to simultaneously. member doing it's store on an when prioritized into And So job priorities we've get the that we've membership. level driving upgrading team a customers such growth is But shared factors, dual both. new continually there which into refocus when other in because have point we'll an be is of do net attempt existing versus to growth. will trading door, amazing we try the hard them to job, done members at premium previously But

opted we over the So choose X to other.

some What marketing guys tools you could retail frequent users? help are of tools, less that the target use to

So out the the stops all there's we're now, off really table. pulling right and nothing

lifting and e-mail, to are targeted doing new our then attract has year-over-year try Again, social paid new of focus stores growth of We our value our much customer. traffic have of to and XX-mile digital, that growth blend to the a existing prioritized a all and so incremental again. members radius really with with within traffic brand of numbers. retail those start mouth been some lifetime we of leadership existing over we taking on and just expect driving marketing word building in time, and seeing our stores to, But our the the

locations pricing you tested markets And how pricing And Great. structure how the new lastly, long and just changes? test did in? was that many

some accretive the incremental us the highly gave that's we Oh during at day plan knew to launch, that expected, offset that accept that what elevated this me entire which confidence should all looked and it but we gosh. and that enjoyed the which elasticity, can be was here, about going extend was I that you our the to -- across Jed, the to we those great and or churn, And was initial move there XX and revenue strategy. it by was correct at extend we're from network, the accretive, we of end it. willing say, locations

that without package. and Yes. Platinum or how where Titanium this Platinum went it we between Platinum And relaunched $XX.XX delta the accretive. pie, launched And adjustment took tried at whole you when obviously, where year, those Titanium your $XX.XX taking the those markets markets in part back and Titanium looked at part in in you those titanium, was package looking last to taken both some closed we behaved to Chris, of of that, price markets platinum the and the this we Platinum Hence, launched we Titanium mean, markets and and adjustment. I in of was you when your we've

next question from Morgan Gutman comes The Stanley. Simeon of

This is Simeon. on Jackie for

-- you building Just kind comps comp of decision pricing. conversions talk Platinum about of on as the light exceed meaningfully of the reiterate in raised Or Titanium, guidance the scenario well Can would that just to have you back on what don't as earlier the question which the guys guide? the better-than-expected year? half had the in be in

exceed. meaningfully Don't

Yes.

in we so little think but Titanium, Jackie, was our when the bit expectations, got just was think UWC it expectations, We was guide in -- there sales, had think by plus how which driven the -- right? out, at adjustment. quarterly -- the were there really, I different, we a comp price better-than-expected with netted I I line and where Platinum looked increase X we

results. so And offset but up, by sales a retail it lower-than-expected UWC was were

where the versus to sequential improvement beginning at say QX So improvement we net-net, QX, as QX. sequential that of when in largely the expect we we -- push that some do we the from relative year. were balance through of comp the the unchanged do at line. QX we year, in I to would expect And look came

really That's it. just And X quick follow-up. Got helpful.

be really it that the any color guess thoughts exiting are the we're already competitive already carwash is out coming on helpful. would market? capacity competitors have Just on that the of or environment. entered I that Any there space are of

Yes.

exits. We haven't seen any

And on those cost that now to again, that driven just little XXXX. abate operations. of of is that new folks rate we think, building is The units. We operations lot their kicking I of of kind by new And have are really and a rationalization cresting been growth unit access to they there's are the and capital, a a now bit off, digesting into Folks cresting have seen of expect capital. focusing what on of bitten improving sprees, in.

to the they're service, cetera. Some having debt of currently et that

So over this it's because think the several correction, will, and years. for overdue healthy you last slowdown, gotten if little a good long the and space this is I crazy

of The Kleber Baird. next question comes from Justin

for where price In back, follow-up customer, Or guess, those a on plan? ecosystem? the down instances are the the the Platinum. to Just increases UWC I they pushes leaving are base trading they

affordable been but down Yes. We are think bulk a that have it's the some to plan. There the trading very more have leave, chosen to number. small

then do not it. lot come So then it, churn of you miss the car pay get clean go, through customers, look really define used as a at canceled customers we lens, traditional that the see they're members we lost historical we to all cancel they've back me, because to after choose a subscription excuse you a having folks lens so time, that And your again [indiscernible] and you when technically way customer. or remain a that to some -- once having out the

a we and percentage growth So of large program. member coming kind out in of that former that members of back, they're come our have the and

adjustment churn, it's look on elastic price in this with Yes, of rollout a bit relatively conjunction little -- not you it's mean, of done Justin, add, see you this it's mean Titanium. Platinum, I especially would much. at when while I I is elevated pricing when the

unrelated you new the Jed, an Maybe for follow-up, that economics. on makes No, sense. store Okay.

seem year. are chain sales the hit trying million just a store year XX% couple new like -- or average? are you comp first how think How the here out stores 'XX probably as we sit should about long giving comp today? You me to should same-store as Where it maturation AUVs? waterfall in those would growing that of understand $X X stores before new points vintage for today. Just about Like where shaking be we those that the to talked of

color helpful? So any would there be

Yes.

will $X of of on of sale step investments million $X.X million. by reminding in X. by at a $X.X I about to a mean revenue $X.X $X year $X.X X, investment, just that to you net it So million folks And and year of about taking greenfield to million and consisting back million, to from million about $X.X gross grow if build, up will of look right, million increase $X a it offset leaseback about just million

had was well. back a again, half-weighted new right. . That's as of kind okay. But build we say I going to

Next Phillip question Blair. comes of William from Blee

a of of the show updated touched on of periods of just provide are And thoughts drivers demographics your really distress, some volatility? view can maybe which key lot stickiness retail you your been consumers what base? composition But There's around income discussion customer. lower in signs weakness to the the you starting on maybe subscription, there, during an membership the some the of on of especially around

where Yes. appeal across universal I'll start by all we space saying a demographics. we feel very in fortunate to have be

unique highest their which budgets car a also see our we loves pressure And their likes demographic capture ticket rates, lower -- spread is lower to of keep a and highest are when under wash, our some thin. the car everyone that ones clean. some in And enjoy phenomenon, the demographic everyone averages but of in in more they're markets cases, also so stores are kind

bit and And so they churn little is we back once seen confidence think in consumer flush. [ because elevated cohort a improves back bottom ] them volume, we'll have we back, economy become the will -- come retail comes they're to that things cyclical which quick get once and quartile more and as impact very morbid on

segments stores little believe demographic, which the Yes. X are is the consumer. putting right just particularly look within a certainly is there's lower lower at at and When across on finer consumer now, lower income that on lowest-performing pressure And X you point that. bit income the some -- the income the macro the we there portfolio, demographics, XX this why stores

helpful. elevating and going then offerings expect as Or very remainder on are And this we traffic the see of promotional there could bigger for customer, maybe just reflective do the we can retail drive here? That's that maybe any of Great. you consider such what a that changes on Okay. the should the is year? inflection decline think we potentially pricing other way where to quarter's

earlier, hand Without competitors, our customer customer as customers. tipping up retail for to retail turning we -- mentioned dial for are on acquisition I our promotional the offers

that part . little game can plan dilutive again, enough a being some we part we of plan, have bit action profile -- that offers, is on that So but overly without getting more going given it those our of be the will to room. services, of offers aggressive And margin lean of [indiscernible]

more Yes. This roughly a where little retail business because QX is a It's side that year. sales and that more modeled the the -- difficult is extrapolated out subscription forecast. That is back consistent, of that took it's much easier the to little XX% of our we've that and of we half QX we're we over trend retail What predictable. grateful are comp, to predict. they're

saw QX, to So improves we . expect would what in we and retail comp the -- extent else from would we constant, improved expect staying everything performance.

Lasser from comes Michael of UBS. question next The

should the prices, under operate have of you your to their prices, this more marketplace? might that competitors pressure some provide more meaning if you [indiscernible] of to opportunity longevity umbrella raise think about a comfortable more also which [indiscernible] provide higher John, more such marketplace in you to how is operate, consolidation versus that competitors raising risk prices could the did that put as sustain going your competitors for in on you your for

pricing deliberate elasticity as And has strategy, always our you our somewhat to very demand been we're curve. just careful, so and and philosophy the conservative. this in think know, I thoughtful sensitive and Michael, pricing

taken don't see to I'm drop This just increase that I can't offers not but XX plan, where I tremendous mic, for almost your have membership a Michael. I the to smiling important our And face. price plan, if that or you're not in think at [indiscernible], we on I our is membership we've base that know value. [indiscernible] it's highlight not, chosen touch years. smiling

we're relatively again, conservative. pricing, retail our On

on we're that's in not that. right tremendous that a for point. are base We most retail markets at to looking almost median price we And market think with price all motorists. the a $XX value take But

So think less when a have [indiscernible]. on that has large they of made is sensitive, menu sales that we the says our the buy. of buyers we've just base where of upper the X best. been price saying And portfolio, our we have very consumer there's where moves And our internally a called that come customer internally they the saying she segment want package in, a rockstar, there's end

have And run [indiscernible] been us. then had haven't Shield our good, better, a better, we home we had the the has just for so And until up best. good, a now, but

Now we have Titanium.

the enjoying price we're to And success offer being price a it's that without that X basically so a increase in and premium offerings increase. Michael, able them

Titanium question pricing follow-up My mostly now there were off have deployed pieces a moving of you is changes increase and the promotional One, are that X the like fully between parts. in Platinum and of and pricing for the on lot seems program. then that

a can also retail greater expect you you changes quantify of the give those how [indiscernible]? decelerated next sense quarters? you us And over worse aggregate what contribution from can So from couple much the be to

Michael. Yes,

when the growth of So members, up year Keep the majority to existing is of the our year already or price last the the at QX year Titanium our trading of are, stores -- come the of side end XX% package. this look in of during that comp on we into the them and of the mind seen this from or Platinum end Titanium adjustment $XX.XX either balance and going going expectations taking year. this what last into had

most adjustment, price that from then there. is benefit from in going per some member it revenue be increase and Titanium come there'll of to the So but

at were low when were you when low teens. QX, negative look we at retail retail, And in QX. negative versus comps QX we we double-digit QX, The look

Tristan The BMO Thomas-Martin next comes Capital Markets. of question from

higher? out, Is looking increase out push which people Just driving the I or then you little then kind plan the that go think we a base, in theoretically further a would people If raise should of the titanium. B price to or said the X, vision? year is into Platinum platinum of longer-term then

that for this us net some we perhaps churn affects over service. the earlier never to nature time never, would impact evaluate Again, be prudent how be back What what that elevated market. telegraph think select and incremental conference to it broad would member call. that against would growth any But to demand by my measured a for offset in and want given test pricing growth don't be of the and comment, I moves say

right select team's part. always reserve this make And really So that's appropriate we to the will time. moves at the judgment on a call

expansion a X price have point, then our holding for but I the of is line will clearly, we experiencing input that at now. if to objectives, we're up, we're think certain costs a take rising just given the margin and

mean, thing we're look input variables X to just we the It's I X about that value customer packages. whether right our price a at speed, customer that but service, Tristan, proposition, not there between in many when thinking are increase. at Yes, take different price so quality, the looking is -- [indiscernible]

when going the we take And are come think so all into about to time factors those appropriate pricing. to play, .

do then see And What X just it. you Got was? more. M&A multiple

multiple answer heavier asset, and the short are question, pretty range. the folks through multiple. business just year. [indiscernible] they leaned a XX-ish the have some lower so to that multiple in precipitous But trading your the of what that's grow things There's little today on on been depends XX to that to Depends been well, think compression they effect in last over to been some can the lens the

next of The Carlino Christian comes from question JPMorgan.

speak is the down to been it a that many either us clarification. members When what is or churned as of when maybe to that to of penetration, XX% and far how understand Titanium to tried or so of help And tried X% platinum? XX% back that and have to has traded revenues? retention like? speak have penetration, point you you One XX% members it Just have out actually XX% percentage

Yes.

So when we're net you and we numbers sharing that churn. members, not those those with share are the are after numbers, revenue,

that so celebrates which think I is would cautious we number we're promotional company that, and so and never be reports responsible. it And a why that

right? this least think, Christian, believe as feel pull win, expect promotions of reasonable We year, bit actually we're call. whether just real at that it's that's Titanium And I communicated next back we We mix our goal work exactly these rolled XX%, just on just that there, XX% going a year a we to So that last good the and of little towards. of end recently have about XX% we're middle believe seeing -- north or member longer the term that north We little a bit back more to off. of do today. come color

in it. intrusion you where terms in to markets favor? read XX And given some starting Got then backdrop, And your years, the helpful. the did should you [ development earlier [ things saw just past to of to competitive there That's question, growth of length unit continue to see clarify into relative back you turn slow of then in Just XX pipeline? competitive the an the really ] the most on couple that actually the say are ]? any of

the And pervasive Yes. there's second new and the We've by country. more no across intensity is where seen way, part us. any question, I not to to would than market been the then competition your competitive we've the within of say customer It's other. our we over value years. competition tough best X-mile the will in believe for a experience our best of the had and radius that's prevail. most portfolio operator, delivering that half we've ultimately -- it's the And belief been X X

focus on, can over mentioned, customer the which speed, we is we focus and what we obsess on control, as what experience. so quality, we don't And Jed competition

got we that to day. [indiscernible], then business single earn every And

you brand-new and shiny build it cool. and really And can a could box so look sexy

our customer service, hear time it. back business again, may business, and in are time that that we providing where the But time really And elevate what deliver. that delivers try great to value You we and And they again, really, actually the it's seen and upon go that well. coming time people customers we've hospitality and that's providers is that and prop. [indiscernible] service customer do we service we're again we

on of where compared still decline The just X growth into -- of to high the the again, but to terms your rate ago, a second coming to rate is was question in part it market, still XX ago. at XXXX. units was of reiterate, we new years years there's expect And

just while at the -- about we a think to that's of expect what slow there's the on down XXXX, to into good pipeline, -- what pipeline we obviously, And as so with the picture, do a side XX-month our we and unit pretty and -- our it's a we we're kind here. pace look at got seeing expect to us cycle. our things. I macro We've not growth of visibility We continue similar greenfield development expect

The from Lantz next of David question comes Wells Fargo.

line and of costs. a over Can the and labor chemicals bit more of drivers considering you item How about in the balance about year? are talk cost detail you rising input deleverage thinking of this the

Yes.

cycle of our where at annual look adjustment first as our annual general process. you when frontline about driven on and of we line the quarter, during merit of an is team inflation is [indiscernible] during the members given expense. part by wage Most that And managers cost quarter, labor members. chemicals, that and are team about labor -- So saw the that XX% the X.X% the of

with So consistent we that we'd expect saw to in hold what relatively QX.

just business. our really side during we usage G&A we we was good on G&A things, through sourcing some a there. -- the we side, of From able drive also the Where were the chemical that year-over-year. balance some at side savings quarter, than the leverage would we our from got then when to look pretty look efficiencies help able to per on and on car but efficiencies chemical the at being cost been. identify cost had continue a we where the On chemical -- of year. it's to expect you chemical of side the some what improvement And When the historically our the in lower it's to

that was of Some timing.

don't second half we the expect continue year. the of So all to of into that

half greenfields bit And you the online. our a half. having but first margin the think, just load, little just other to half, and greenfields in I About It second labor X fully we coming a to worth David, we look greenfields. have little first labor the of as -- be expect greenfields, nuance half, the staff store at ramped. just pinch full we cadence in is be haven't more The that to creates noting expect they that XX% with those new a of the that second our XX% level of

And Got me. for then income it. comps helpful. chain down last lower just in retail of did low That's How X teens? compared that to average demographics

those I Yes. -- yes, for earlier, they The to referenced both quadrants of the for lower were income flat that negative stores XX -- demographics, so segments. those

The question America. of comes next of Bank from Lu Vicki

so now first question you is XX%. mentioned is This [indiscernible] penetration above premium is, that my

is term, X target just between of what split your types memberships? curious, all long the Over

we healthy we million don't ] we're XX% really, premium this can think have kind base those trade a Yes. that [ that, margin feel then really the that We program, another in still call really XX% our Platinum numbers. our how if grow, more about plan, many Today, question. want in it, Again, X.X dodge of early fact of to into can can to that, members say, . How high trees in mix. the Titanium of we've a in I the fortunate stages and are that's XX% got the in launch. that our of I mix And just plans and awesome. XX% our high is now our customers just rounded

business, grow And feel continuing that good really sit. with side and where of not try but we to done so we're we the

Yes.

Platinum, a natural launched before I back think roughly in where we base base. -- a always been XX% premiumization had was just Platinum there's just going right, it Titanium XX% business, the we in to a

Platinum. inverse. before the go actually it base than had years We You members back was we X had more that,

as tailwind it. where grow premium been the say So trading over to goal is get time, difficult and taps high to we out packages. It's customers those more this it of continue really can into always that there's as to natural

follow-up my then question. And Yes.

you space the high retail of with So competition trends environment, are level acquisition costs? any a in soft seeing member in and

No.

We're -- having customer member customer we're again, our an relatively them in. they're because, not is existing negligible in and business door. the our to costs, beauty money them our to spend or focus So trading get conversion the taking costs of acquisition go

on those could retail will we side, there's as probably that them as well of [indiscernible] if customer apply So we trade membership be investment, any acquisition some the in. to which

overall So expense the negligible is path. That's But the the today. that's journey.

question-and-answer John session. This like any for the to conference over turn our Lai I'd to concludes closing remarks. back

we Thanks, innings us, We're massive At early Car of us thanks, for operator, and a everyone, joining the and Mister opportunity our growth cycle. in have in being life today. we're Wash, call focused our what front against very look of you we and optimistic we're as deliberate of to much. forward We ahead very talking the as we execute about our build days. so again to Thank . you lies and in plan, through XX term. guys long

you disconnect. Thank today's presentation, now for The attending now conference and concluded. has you may