10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40542

Mister Car Wash, Inc.

(Exact name of registrant as specified in its charter)


Delaware	47-1393909
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
222 E. 5th Street Tucson, Arizona	85705
(Address of principal executive offices)	(Zip Code)

(520) 615-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

MCW

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, the registrant had 312,503,201 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents


		Page
	FORWARD-LOOKING STATEMENTS	2

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

Signatures		34

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our intent, belief and expectations about our future results of operations and financial position, business strategy and approach are forward-looking. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “vision,” or “should,” or the negative thereof or other variations thereon or comparable terminology. However, the absence of these words or similar terminology does not mean that a statement is not forward-looking.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q due to various factors, including, but not limited to, those identified in Part I. Item 1A. “Risk Factors” and in Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”) and in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. These risks and uncertainties include, but are not limited to:

•

An overall decline in the health of the economy and other factors impacting consumer spending, such as natural disasters, the occurrence of a recession, inflation and worsening in economic conditions may affect consumer purchases and reduce demand for our services.

•

Our ability to attract new customers, retain existing customers and maintain or grow the number of Unlimited Wash Club ® (“UWC”) Members.

•

If we fail to acquire, open and operate new locations in a timely and cost-effective manner and enter into new markets, our financial performance could be materially and adversely affected.

•

We may not be able to successfully implement our growth strategies on a timely basis or at all.

•

We are subject to a number of risks and regulations related to credit card and debit card payments we accept.

•

Supply chain disruption and other increased operating costs could materially and adversely affect our results of operations.

•

Our locations may experience difficulty hiring and retaining key or sufficient qualified personnel or increases in labor costs.

•

We lease or sublease the land and buildings where a number of our locations are situated, which could expose us to possible liabilities and losses.

•

Our indebtedness could adversely affect our financial health and competitive position.

•

Our business is subject to various laws and regulations and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect our business.

•

Our locations are subject to certain environmental laws and regulations.

•

We are subject to data security and privacy risks that could negatively impact our results of operations or reputation.

•

We may be unable to adequately protect, and we may incur significant costs in enforcing or defending, our intellectual property and other proprietary rights.

•

Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors purchasing shares of our common stock.

Given these and other risks and uncertainties applicable to us, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from that expressed or implied by the forward-looking statements included in this Quarterly Report on Form 10-Q.

Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date hereof. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “Mister Car Wash,” “Mister,” the “Company,” “we,” “us,” and “our,” refer to Mister Car Wash, Inc. and its subsidiaries on a consolidated basis.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Mister Car Wash, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

(Unaudited)


	As of
(Amounts in thousands, except share and per share data)	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	136,095	$	65,152
Restricted cash		138		70
Accounts receivable, net		2,796		3,941
Other receivables		21,722		15,182
Inventory, net		8,273		9,174
Prepaid expenses and other current assets		12,506		12,618
Total current assets		181,530		106,137

Property and equipment, net		595,537		560,874
Operating lease right of use assets, net		813,924		776,689
Other intangible assets, net		120,546		123,615
Goodwill		1,109,815		1,109,815
Other assets		9,212		9,102
Total assets	$	2,830,564	$	2,686,232

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	36,119	$	25,649
Accrued payroll and related expenses		17,216		17,218
Other accrued expenses		58,670		41,196
Current maturities of operating lease liability		42,029		40,367
Current maturities of finance lease liability		706		668
Deferred revenue		32,368		29,395
Total current liabilities		187,108		154,493

Long-term portion of debt, net		896,620		895,830
Operating lease liability		796,203		759,775
Financing lease liability		14,417		14,779
Deferred tax liability		64,579		53,395
Other long-term liabilities		6,271		6,832
Total liabilities		1,965,198		1,885,104

Stockholders’ equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 311,758,330 and 306,626,530 shares outstanding as of June 30, 2023 and December 31, 2022, respectively		3,123		3,072
Additional paid-in capital		799,498		783,579
Retained earnings (Accumulated Deficit)		62,745		14,477
Total stockholders’ equity		865,366		801,128
Total liabilities and stockholders’ equity	$	2,830,564	$	2,686,232

See accompanying notes to unaudited condensed consolidated financial statements.

Mister Car Wash, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Amounts in thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net revenues	$	236,894		$	225,159		$	462,854		$	444,578
Cost of labor and chemicals		70,824			69,351			137,616			134,889
Other store operating expenses		90,337			79,029			179,803			156,830
General and administrative		27,829			25,610			52,012			49,297
Gain on sale of assets, net		(4,728	)		(3,146	)		(4,791	)		(2,687	)
Total costs and expenses		184,262			170,844			364,640			338,329
Operating income		52,632			54,315			98,214			106,249

Other expense:
Interest expense, net		18,295			8,762			36,043			16,928
Total other expense		18,295			8,762			36,043			16,928
Income before taxes		34,337			45,553			62,171			89,321
Income tax provision		7,205			9,894			13,903			18,174
Net income	$	27,132		$	35,659		$	48,268		$	71,147

Other comprehensive income, net of tax:
Gain on interest rate swap		-			301			-			2,170
Total comprehensive income	$	27,132		$	35,960		$	48,268		$	73,317

Net income per share:
Basic	$	0.09		$	0.12		$	0.16		$	0.24
Diluted	$	0.08		$	0.11		$	0.15		$	0.22
Weighted-average common shares outstanding:
Basic		309,314,858			302,666,291			308,308,972			301,803,664
Diluted		328,283,353			327,229,531			327,951,399			328,205,776

See accompanying notes to unaudited condensed consolidated financial statements.

Mister Car Wash, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net income	$	48,268		$	71,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		33,819			30,081
Stock-based compensation expense		11,354			11,498
Gain on sale of assets, net		(4,791	)		(2,687	)
Amortization of debt issuance costs		842			842
Non-cash lease expense		21,838			19,433
Deferred income tax		11,058			13,983
Changes in assets and liabilities:
Accounts receivable, net		1,145			(1,017	)
Other receivables		(2,219	)		8,455
Inventory, net		905			(692	)
Prepaid expenses and other current assets		133			(3,129	)
Accounts payable		5,593			6,137
Accrued expenses		6,525			(1,119	)
Deferred revenue		2,966			1,416
Operating lease liability		(19,591	)		(18,374	)
Other noncurrent assets and liabilities		(723	)		(1,359	)
Net cash provided by operating activities	$	117,122		$	134,615

Cash flows from investing activities:
Purchases of property and equipment		(127,868	)		(76,399	)
Acquisition of car wash operations, net of cash		(4,985	)		(47,039	)
Proceeds from sale of property and equipment		82,622			3,672
Net cash used in investing activities	$	(50,231	)	$	(119,766	)

Cash flows from financing activities:
Proceeds from issuance of common stock under employee plans		4,444			5,436
Payments on debt borrowings		-			(2,100	)
Principal payments on finance lease obligations		(324	)		(274	)
Net cash provided by financing activities	$	4,120		$	3,062

Net change in cash and cash equivalents and restricted cash during period		71,011			17,911
Cash and cash equivalents and restricted cash at beginning of period		65,222			19,858
Cash and cash equivalents and restricted cash at end of period	$	136,233		$	37,769

Supplemental disclosure of cash flow information:
Cash paid for interest	$	30,281		$	16,134
Cash paid for income taxes	$	1,500		$	1,791

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment in accounts payable	$	14,686		$	9,182
Property and equipment in other accrued expenses	$	29,718		$	5,687
Proceeds from sale of property and equipment in other receivables	$	4,149		$	-
Stock option exercise proceeds in other receivables	$	172		$	2

See accompanying notes to unaudited condensed consolidated financial statements.

Mister Car Wash, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Amounts in thousands, except share and per share data)

(Unaudited)

Six Months Ended June 30, 2023


	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Stockholders’ Equity
	Shares		Amount
Balance as of December 31, 2022		306,626,530	$	3,072	$	783,579		$	—	$	14,477	$	801,128
Stock-based compensation expense		—		—		5,361			—		—		5,361
Vesting of restricted stock units		4,296		—		—			—		—		—
Exercise of stock options		1,471,021		15		1,101			—		—		1,116
Net income		—		—		—			—		21,136		21,136
Balance as of March 31, 2023		308,101,847	$	3,087	$	790,041		$	-	$	35,613	$	828,741
Stock-based compensation expense		—		—		5,993			—		—		5,993
Issuance of common stock under employee plans		207,042		2		1,591			—		—		1,593
Vesting of restricted stock units		634,069		6		(6	)		—		—		—
Exercise of stock options		2,815,372		28		1,879			—		—		1,907
Net income		—		—		—			—		27,132		27,132
Balance as of June 30, 2023		311,758,330	$	3,123	$	799,498		$	-	$	62,745	$	865,366

Six Months Ended June 30, 2022


	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)			Stockholders’ Equity
	Shares		Amount
Balance as of December 31, 2021		300,120,451	$	3,007	$	752,343		$	225	$	(98,423	)	$	657,152
Stock-based compensation expense		—		—		5,519			—		—			5,519
Exercise of stock options		1,486,727		15		1,311			—		—			1,326
Gain on interest rate swap		—		—		—			1,869		—			1,869
Net income		—		—		—			—		35,488			35,488
Balance as of March 31, 2022		301,607,178	$	3,022	$	759,173		$	2,094	$	(62,935	)	$	701,354
Stock-based compensation expense		—		—		5,979			—		—			5,979
Issuance of common stock under employee plans		251,003		2		2,415			—		—			2,417
Vesting of restricted stock units		457,372		5		(5	)		—		—			—
Exercise of stock options		1,601,615		16		1,680			—		—			1,696
Gain on interest rate swap		—		—		—			301