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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 March 31, 2024

OR

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)

Registrant’s telephone number, including area code: (520) 615-4000

 

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.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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 April 30, 2024, the registrant had 319,509,183 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

4

 

Condensed Consolidated Statements of Cash Flows

5

Condensed Consolidated Statements of Stockholders' Equity

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

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

 

1


 

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 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,” “should,” or "vision," or the negative thereof or comparable terminology.

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, 2023 (the “2023 Form 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, growing 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 are unable to compete successfully against other companies and operators in our industry, including our ability to acquire, open and operate new locations in a timely and cost-effective manner, we may lose customers and market share and our revenues may decline
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, including environmental, and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect our business.
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. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q, they may not be indicative of results or developments in future periods.

Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. 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.

2


 

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)

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

10,701

 

 

$

19,047

 

Accounts receivable, net

 

6,475

 

 

 

6,304

 

Other receivables

 

17,693

 

 

 

14,714

 

Inventory, net

 

7,647

 

 

 

8,952

 

Prepaid expenses and other current assets

 

10,220

 

 

 

11,877

 

Total current assets

 

52,736

 

 

 

60,894

 

 

 

 

 

 

 

Property and equipment, net

 

773,230

 

 

 

725,121

 

Operating lease right of use assets, net

 

836,528

 

 

 

833,547

 

Other intangible assets, net

 

116,023

 

 

 

117,667

 

Goodwill

 

1,134,734

 

 

 

1,134,734

 

Other assets

 

12,010

 

 

 

9,573

 

Total assets

$

2,925,261

 

 

$

2,881,536

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

33,676

 

 

$

33,641

 

Accrued payroll and related expenses

 

23,512

 

 

 

19,771

 

Other accrued expenses

 

31,046

 

 

 

38,738

 

Current maturities of long-term debt

 

6,920

 

 

 

 

Current maturities of operating lease liability

 

44,850

 

 

 

43,979

 

Current maturities of finance lease liability

 

766

 

 

 

746

 

Deferred revenue

 

33,899

 

 

 

32,686

 

Total current liabilities

 

174,669

 

 

 

169,561

 

 

 

 

 

 

 

Long-term portion of debt, net

 

913,350

 

 

 

897,424

 

Operating lease liability

 

810,783

 

 

 

809,409

 

Financing lease liability

 

13,833

 

 

 

14,033

 

Deferred tax liability

 

79,506

 

 

 

71,657

 

Other long-term liabilities

 

4,396

 

 

 

4,417

 

Total liabilities

 

1,996,537

 

 

 

1,966,501

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value, 1,000,000,000 shares authorized,
   
317,835,082 and 315,192,401 shares outstanding as of
   March 31, 2024 and December 31, 2023, respectively

 

3,184

 

 

 

3,157

 

Additional paid-in capital

 

814,296

 

 

 

817,271

 

Retained earnings

 

111,244

 

 

 

94,607

 

Total stockholders’ equity

 

928,724

 

 

 

915,035

 

Total liabilities and stockholders’ equity

$

2,925,261

 

 

$

2,881,536

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

Mister Car Wash, Inc.

Condensed Consolidated Statements of Operations

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

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Net revenues

$

239,183

 

 

$

225,960

 

Cost of labor and chemicals

 

71,658

 

 

 

66,792

 

Other store operating expenses

 

96,803

 

 

 

89,466

 

General and administrative

 

29,710

 

 

 

24,183

 

Gain on sale of assets

 

(1,533

)

 

 

(63

)

Total costs and expenses

 

196,638

 

 

 

180,378

 

   Operating income

 

42,545

 

 

 

45,582

 

 

 

 

 

 

 

Other (income) expense:

 

 

 

 

 

Interest expense, net

 

20,024

 

 

 

17,748

 

Loss on extinguishment of debt

 

1,882

 

 

 

-

 

Other income

 

(5,189

)

 

 

-

 

Total other expense, net

 

16,717

 

 

 

17,748

 

Income before taxes

 

25,828

 

 

 

27,834

 

Income tax provision

 

9,191

 

 

 

6,698

 

Net income

$

16,637

 

 

$

21,136

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

     Basic

$

0.05

 

 

$

0.07

 

     Diluted

$

0.05

 

 

$

0.06

 

Weighted-average common shares outstanding:

 

 

 

 

 

     Basic

 

315,838,788

 

 

 

307,291,909

 

     Diluted

 

330,012,144

 

 

 

327,608,266

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


 

Mister Car Wash, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

16,637

 

 

$

21,136

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization expense

 

19,595

 

 

 

17,307

 

Stock-based compensation expense

 

6,246

 

 

 

5,361

 

Gain on sale of assets, net

 

(1,533

)

 

 

(63

)

Loss on extinguishment of debt

 

1,882

 

 

 

-

 

Amortization of debt issuance costs

 

410

 

 

 

419

 

Non-cash lease expense

 

11,917

 

 

 

10,739

 

Deferred income tax

 

7,849

 

 

 

5,428

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(172

)

 

 

3,009

 

Other receivables

 

(4,096

)

 

 

1,128

 

Inventory, net

 

1,305

 

 

 

946

 

Prepaid expenses and other current assets

 

1,703

 

 

 

1,850

 

Accounts payable

 

2,344

 

 

 

2,553

 

Accrued expenses

 

3,615

 

 

 

5,155

 

Deferred revenue

 

1,214

 

 

 

1,114

 

Operating lease liability

 

(10,499

)

 

 

(9,696

)

Other noncurrent assets and liabilities

 

(427

)

 

 

631

 

Net cash provided by operating activities

$

57,990

 

 

$

67,017

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(81,844

)

 

 

(72,059

)

Proceeds from sale of property and equipment

 

4,900

 

 

 

8,899

 

Net cash used in investing activities

$

(76,944

)

 

$

(63,160

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from issuance of common stock under employee plans

 

729

 

 

 

1,055

 

Payments for repurchases of common stock

 

(9,924

)

 

 

-

 

Proceeds from debt borrowings

 

925,000

 

 

 

-

 

Proceeds from revolving line of credit

 

23,000

 

 

 

-

 

Payments on debt borrowings

 

(901,201

)

 

 

-

 

Payments on revolving line of credit

 

(23,000

)

 

 

-

 

Payments of deferred financing costs

 

(3,772

)

 

 

-

 

Principal payments on finance lease obligations

 

(180

)

 

 

(161

)

Net cash provided by financing activities

$

10,652

 

 

$

894

 

 

 

 

 

 

 

Net change in cash and cash equivalents and restricted cash during period

 

(8,302

)

 

 

4,751

 

Cash and cash equivalents and restricted cash at beginning of period

 

19,119

 

 

 

65,222

 

Cash and cash equivalents and restricted cash at end of period

$

10,817

 

 

$

69,973

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets

 

 

 

 

 

Cash and cash equivalents

$

10,701

 

 

$

69,903

 

Restricted cash, included in prepaid expenses and other current assets

 

116

 

 

 

70

 

Total cash, cash equivalents, and restricted cash

$

10,817

 

 

$

69,973

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for interest

$

19,233

 

 

$

11,697

 

Cash paid for income taxes

$

264

 

 

$

151

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

Property and equipment in accounts payable

$

15,596

 

 

$

11,993

 

Property and equipment in other accrued expenses

$

4,234

 

 

$

5,969

 

Payment of debt financing costs in other accrued expenses

$

1,503

 

 

$

-

 

Stock option exercise proceeds in other receivables

$

-

 

 

$

61

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

Mister Car Wash, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

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

(Unaudited)

 

Three Months Ended March 31, 2024

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Retained Earnings

 

 

Stockholders’ Equity

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2023

 

315,192,401

 

 

$

3,157

 

 

$

817,271

 

 

$

94,607

 

 

$

915,035

 

Stock-based compensation expense

 

 

 

 

 

 

 

6,246

 

 

 

 

 

 

6,246

 

Vesting of restricted stock units

 

139,409

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

Exercise of stock options

 

4,116,291

 

 

 

42

 

 

 

704

 

 

 

 

 

 

746

 

Shares repurchased

 

(1,613,019

)

 

 

(16

)

 

 

(9,924

)

 

 

 

 

 

(9,940

)

Net income

 

 

 

 

 

 

 

 

 

 

16,637

 

 

 

16,637

 

Balance as of March 31, 2024

 

317,835,082

 

 

$

3,184

 

 

$

814,296

 

 

$

111,244

 

 

$

928,724

 

 

 

 

 

Three Months Ended March 31, 2023

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Retained Earnings

 

 

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

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

Mister Car Wash, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(Unaudited)

 

1. Nature of Business

Mister Car Wash, Inc., a Delaware corporation, together with its subsidiaries (collectively, the Company), is based in Tucson, Arizona and is a provider of conveyorized car wash services. We primarily operate Express Exterior Locations, which offer express exterior cleaning services along with free vacuum services, and interior cleaning services at select locations. As of March 31, 2024, we operated 482 car washes in 21 states.

 

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the 2023 Form 10-K.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the included disclosures are adequate, and the accompanying unaudited condensed consolidated financial statements contain all adjustments which are necessary for a fair presentation of our consolidated financial position as of March 31, 2024, consolidated results of operations for the three months ended March 31, 2024 and 2023, and consolidated cash flows for the three months ended March 31, 2024 and 2023. Such adjustments are of a normal and recurring nature. The consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the consolidated results of operations that may be expected for any other future interim or annual period.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. All material intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Within the unaudited condensed consolidated financial statements certain immaterial amounts have been reclassified to conform with current period presentation. We reclassified Restricted cash of $116 and $72 from an individual line item on the unaudited condensed consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively, to Prepaid expenses and other current assets to conform with the current period presentation.

 

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the periods reported. Some of the significant estimates that we have made pertain to the determination of deferred tax assets and liabilities; estimates utilized to determine the fair value of assets acquired and liabilities assumed in business combinations and the related goodwill and intangibles; and certain assumptions used related to the evaluation of goodwill, intangibles, and property and equipment asset impairment. Actual results could differ from those estimates.

 

 

7


 

Accounts Receivable, Net

Accounts receivable are presented net of an allowance for doubtful accounts of $30 and $68 as of March 31, 2024 and December 31, 2023, respectively. The activity in the allowance for doubtful accounts was immaterial for the three months ended March 31, 2024 and 2023.

Other Receivables

Other receivables consisted of the following for the periods presented:

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Payroll tax withholding and exercise proceeds receivable

$

17

 

 

$

-

 

Construction receivable

 

5,537

 

 

 

6,480

 

Income tax receivable

 

1,520

 

 

 

3,051

 

Insurance receivable

 

4,380

 

 

 

3,686

 

Employee retention credit receivable

 

5,189

 

 

 

-

 

Other

 

1,050

 

 

 

1,497

 

    Total other receivables

 

17,693

 

 

 

14,714

 

 

Inventory, Net

Inventory consisted of the following for the periods presented:

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Chemical washing solutions

$

7,804

 

 

$

9,135

 

Reserve for obsolescence

 

(157

)

 

 

(183

)

    Total inventory, net

$

7,647

 

 

$

8,952

 

The activity in the reserve for obsolescence was immaterial for the three months ended March 31, 2024 and 2023.

Revenue Recognition

The following table summarizes the composition of our net revenues for the periods presented:

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Recognized over time

$

176,259

 

 

$

156,891

 

Recognized at a point in time

 

62,846

 

 

 

68,970

 

Other revenue

 

78

 

 

 

99

 

    Net revenues

$

239,183

 

 

$

225,960

 

 

8


 

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average shares outstanding for the period and includes the dilutive impact of potential new shares issuable upon vesting and exercise of stock options, vesting of restricted stock units, and stock purchase rights granted under an employee stock purchase plan. Potentially dilutive securities are excluded from the computation of diluted net income per share if their effect is antidilutive. Reconciliations of the numerators and denominators of the basic and diluted net income per share calculations for the periods presented are as follows:

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

Net income

$

16,637

 

 

$

21,136

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

   Weighted-average common shares outstanding - basic

 

315,838,788

 

 

 

307,291,909

 

   Effect of potentially dilutive securities:

 

 

 

 

 

       Stock options

 

12,685,179

 

 

 

19,798,577

 

       Restricted stock units

 

1,457,395

 

 

 

498,213

 

       Employee stock purchase plan

 

30,782

 

 

 

19,567

 

   Weighted-average common shares outstanding - diluted

 

330,012,144

 

 

 

327,608,266

 

 

 

 

 

 

 

Net income per share - basic

$

0.05

 

 

$

0.07

 

Net income per share - diluted

$

0.05

 

 

$

0.06

 

 

The following potentially dilutive shares were excluded from the computation of diluted net income per share for the periods presented because including them would have been antidilutive:

 

 

Three Months Ended March 31,

 

2024

 

 

2023

 

Stock options

 

3,666,223

 

 

 

2,677,756

 

Restricted stock units

 

-

 

 

 

356,400

 

Employee stock purchase plan

 

3,133

 

 

 

3,619

 

 

Employee Retention Credit

In response to the COVID-19 pandemic, the Employee Retention Credit (“ERC”), was established under the Coronavirus Aid, Relief, and Economic Security Act. The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer paid to employees from March 13, 2020 to December 31, 2020. Companies who meet the eligibility requirements can claim the ERC on an original or adjusted employment tax return for a period within those dates.

In March 2024, the Company determined that it qualifies for $5,189 in relief for the period from March 13, 2020 to December 31, 2020. Upon receipt of the credit, the Company will owe $526 in tax advisory costs associated with the assessment of the tax credit. This amount was accrued within General and administrative expenses as of March 31, 2024. As there is no authoritative guidance under U.S. GAAP for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standards 20, or IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance of receipt of the identified ERC amount and recorded the $5,189 credit in Other income on our condensed consolidated statements of operations during the three months ended March 31, 2024. A corresponding accrual of the tax credit receivable was recorded under Other receivables on our condensed consolidated balance sheet as of March 31, 2024.

9


 

 

Recently Adopted Accounting Pronouncements

There have been no new accounting standards issued which would require either disclosure or adoption in the current period.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. We expect this ASU to only impact our disclosures with no impacts to our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures regarding significant segment expenses and other segment items for public entities on both an annual and interim basis. Specifically, the update requires that entities provide, during interim periods, all disclosures related to a reportable segment's profit or loss and assets that were previously required only on an annual basis. Additionally, this guidance necessitates the disclosure of the title and position of the Chief Operating Decision Maker ("CODM"). The new guidance does not modify how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU must be applied retrospectively to all prior periods presented. Early adoption is permitted. We are currently evaluating the impact this ASU may have on our consolidated financial statements and related disclosures.

 

3. Property and Equipment, Net

Property and equipment, net consisted of the following for the periods presented:

 

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Land

$

127,185

 

 

$

121,960

 

Buildings and improvements

 

290,506

 

 

 

263,468

 

Finance leases

 

16,604

 

 

 

16,604

 

Leasehold improvements

 

137,481

 

 

 

135,861

 

Vehicles and equipment

 

299,574

 

 

 

285,127

 

Furniture, fixtures and equipment

 

102,260

 

 

 

100,457

 

Construction in progress

 

88,075

 

 

 

75,639

 

Property and equipment, gross

 

1,061,685

 

 

 

999,116

 

Less: accumulated depreciation

 

(284,915

)

 

 

(270,706

)

Less: accumulated amortization - finance leases

 

(3,540

)

 

 

(3,289

)

Property and equipment, net

$

773,230

 

 

$

725,121

 

For the three months ended March 31, 2024 and 2023, depreciation expense was $17,700 and $15,379, respectively.

For the three months ended March 31, 2024 and 2023, amortization expense on finance leases was $251 and $251, respectively.

10


 

4. Other Intangible Assets, Net

Other intangibles assets, net consisted of the following as of the periods presented:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

Trade names and Trademarks

$

107,000

 

 

$

-

 

 

$

107,000

 

 

 

-

 

CPC Unity System

 

42,900

 

 

 

41,113

 

 

 

42,900

 

 

 

40,040

 

Customer relationships

 

9,700

 

 

 

6,535

 

 

 

9,700

 

 

 

6,430

 

Covenants not to compete

 

13,230

 

 

 

9,159

 

 

 

13,230

 

 

 

8,693

 

Other intangible assets, net

$

172,830

 

 

$

56,807

 

 

$

172,830

 

 

$

55,163

 

For the three months ended March 31, 2024 and 2023, amortization expense associated with our finite-lived intangible assets was $1,644 and $1,677, respectively.

As of March 31, 2024, estimated future amortization expense was as follows:

 

Fiscal Year Ending:

 

 

 

 

2024 (remaining nine months)

 

 

$

3,366

 

2025

 

 

 

1,844

 

2026

 

 

 

1,585

 

2027

 

 

 

741

 

2028

 

 

 

422

 

Thereafter

 

 

 

1,065

 

Total estimated future amortization expense

 

 

$

9,023

 

 

5. Goodwill

Goodwill consisted of the following for the periods presented:

 

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Balance at beginning of period

$

1,134,734

 

 

$

1,109,815

 

   Current period acquisitions

 

-

 

 

 

24,919

 

Balance at end of period

$

1,134,734

 

 

$

1,134,734

 

 

Goodwill is generally deductible for tax purposes, except for the portion related to purchase accounting step-up goodwill.

6. Other Accrued Expenses

Other accrued expenses consisted of the following for the periods presented:

11


 

As of

 

March 31, 2024

 

 

December 31, 2023

 

Utilities

$

5,994

 

 

$

6,130

 

Accrued other tax expense

 

 

7,696

 

 

 

9,482

 

Insurance expense

 

 

5,055

 

 

 

4,355

 

Greenfield development accruals

 

 

4,234

 

 

 

13,343

 

Other

 

 

8,067

 

 

 

5,428

 

   Total other accrued expenses

 

$

31,046

 

 

$

38,738

 

 

Greenfield development accruals represent an obligation to pay for invoices not yet received, primarily related to land and buildings and improvements, on properties which we have taken control of as of March 31, 2024 and December 31, 2023.

 

7. Income Taxes

The effective income tax rates on continuing operations for the three months ended March 31, 2024 and 2023 were 35.6% and 24.1%, respectively. In general, the effective tax rates differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible expenses such as those related to certain executive compensation, and other discrete tax benefits recorded during the period.

The year-to-date provision for income taxes for the three months ended March 31, 2024 included taxes on earnings at an anticipated annual effective tax rate of 25.6% and a net, unfavorable tax impact of $2,585 related primarily to discrete tax expense originating from stock options exercised during the three months ended March 31, 2024.

The year-to-date provision for income taxes for the three months ended March 31, 2023 included taxes on earnings at an anticipated annual effective tax rate of 25.3% and a net, favorable tax impact of $340 related primarily to discrete tax benefits originating from stock options exercised during the three months ended March 31, 2023.

On August 9, 2022, the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) Act of 2022 was signed into law. The CHIPS Act is designed to boost domestic semiconductor manufacturing and encourage U.S. research activities. Also in 2022, the Inflation Reduction Act (“IRA”) of 2022 was signed into law. The IRA created a new book-minimum tax on certain large corporations and an excise tax on stock buybacks while also providing incentives to address climate change mitigation and clean energy, among other items. Most of these changes became effective for the 2023 tax year and after initial evaluation, and similar to the prior quarter, we do not currently expect these laws to have a material effect on the consolidated financial statements.

 

For the three months ended March 31, 2024 and 2023, we recorded $219 and $0 related to unrecognized tax benefits or interest and penalties related to any uncertain tax positions.

 

8. Debt

Long-term debt consisted of the following as of the periods presented:

 

 

As of

 

March 31, 2024

 

 

December 31, 2023

 

Credit agreement

 

 

 

 

 

First lien term loan

$

925,000

 

 

$

901,201

 

Less: unamortized discount and debt issuance costs

 

(4,730

)

 

 

(3,777

)

Less: current maturities of long-term debt

 

(6,920

)

 

 

-

 

First lien term loan, net

 

913,350

 

 

 

897,424

 

 

 

 

 

 

 

Total long-term portion of debt, net

$

913,350

 

 

$

897,424

 

 

12


 

 

As of March 31, 2024, annual maturities of debt were as follows:

 

Fiscal Year Ending:

 

 

 

 

2024 (remaining nine months)

 

 

$

4,619

 

2025

 

 

 

9,169

 

2026

 

 

 

9,078

 

2027

 

 

 

8,988

 

2028

 

 

 

8,898

 

Thereafter

 

 

 

884,248

 

Total maturities of debt

 

 

$

925,000

 

 

As of March 31, 2024 and December 31, 2023, unamortized discount and debt issuance costs were $7,012 and $4,030, respectively, and accumulated amortization of discount and debt issuance costs was $3,196 and $6,145, respectively.

For the three months ended March 31, 2024 and 2023, the amortization of debt issuance costs in interest expense, net in the condensed consolidated statements of operations was approximately $410 and $419, respectively.

Amended and Restated First Lien Credit Agreement

On August 21, 2014, we entered into a Credit Agreement (“Credit Agreement”) which was originally comprised of a term loan (“First Lien Term Loan”) and a revolving commitment (“Revolving Commitment”). The Credit Agreement was collateralized by substantially all personal property (including cash, inventory, property and equipment, and intangible assets), real property, and equity interests owned by us.

Under the First Lien Term Loan under the Credit Agreement, we had the option of selecting either (i) a Base Rate interest rate plus a fixed margin of 2.25% or (ii) a Eurodollar (LIBOR) interest rate for one, two, three or six months plus a fixed margin of 3.25%.

Under the Revolving Commitment under the Credit Agreement, we had the option of selecting either (i) a Base Rate interest rate plus a variable margin of 2.50% to 3.00%, based on our First Lien Net Debt Leverage Ratio, or (ii) a Eurodollar (LIBOR) interest rate for one, two, three or six months plus a variable margin of 3.50% to 4.00%, based on our First Lien Net Leverage Ratio.

In May 2019, we entered into the Amended and Restated First Lien Credit Agreement (“Amended and Restated First Lien Credit Agreement”) which amended and restated the entirety of the Credit Agreement.

 

First Lien Term Loan

In February 2020, we entered into Amendment No. 1 to Amended and Restated First Lien Credit Agreement, which changed the interest rate spreads associated with the credit agreement where (i) the variable margin associated with the Base Rate interest rate plus a variable margin based on our First Lien Net Leverage Ratio changed from 2.25% to 2.50% to 2.00% to 2.25% and (ii) the variable margin associated with the Eurodollar Rate interest rate for one, two, three or six months plus a variable margin based on our First Lien Net Leverage Ratio changed from 3.25% to 3.50% to 3.00% to 3.25%.

 

In December 2021, in connection with the Clean Streak Ventures acquisition, we entered into Amendment No. 3 to the Amended and Restated First Lien Credit Agreement, pursuant to which the previous First Lien Term Loan was increased by $290,000 to $903,301 with the balance due on May 14, 2026. The incremental increase in aggregate principal of $290,000 resulted in $285,962 of proceeds net of discount and debt issuance costs.

 

13


 

In December 2022, we entered into Amendment No. 4 to the Amended and Restated First Lien Credit Agreement with the lenders party thereto, and Jeffries Finance LLC, as administrative agent, to transition from LIBOR to Eurocurrency rate SOFR spread, whereas all revolver borrowings and term loan borrowings under the existing credit agreement will be SOFR based. All other terms governing this term loan facility remained substantially the same.

 

In March 2024, we entered into Amendment No. 5 to the Amended and Restated First Lien Credit Agreement with the lenders party thereto, and Bank of America, N.A. ("BofA") as the successor administrative agent and collateral agent. This amendment further modified the credit agreement by providing $925,000 in first lien term commitments, consisting of $901,201 to refinance outstanding term loans and $23,799 in additional incremental term commitments (collectively, the "2024 Term Loans"). The 2024 Term Loans have an interest rate of Term SOFR or Base Rate, at our option, plus an applicable margin (3.00% for SOFR Loans or 2.00% for Base Rate Loans), subject to step-downs based on the First Lien Net Leverage Ratio. For SOFR Loans, the margin starts at 3.00% and can decrease to 2.75% and 2.50% based on the First Lien Net Leverage Ratio. For Base Rate Loans, the margin begins at 2.00% and can decrease to 1.75% and 1.50%, depending on the First Lien Net Leverage Ratio. The SOFR rate has a floor of 0.00%. Starting September 30, 2024, the loans will be amortized in equal quarterly installments at an annual rate of 1.00% of the original principal amount. As a result of this amendment, the loans are scheduled to mature in March 2031. In connection with Amendment No. 5, we expensed $1,882 of previously unamortized debt issuance costs as a loss on extinguishment of debt in the condensed consolidated statements of operations.

As of March 31, 2024 and December 31, 2023, the amount outstanding under the First Lien Term Loan was $925,000 and 901,201, respectively. As of March 31, 2024 and December 31, 2023, the interest rate on the First Lien Term Loan was 8.33% and 8.46%, respectively.

The Amended and Restated First Lien Credit Agreement requires us to maintain compliance with a First Lien Net Leverage Ratio. As of March 31, 2024, we were in compliance with the First Lien Net Leverage Ratio financial covenant of the Amended and Restated First Lien Credit Agreement.

Revolving Commitment

In May 2019, as a part of the Amended and Restated First Lien Credit Agreement, the Revolving Commitment was increased from $50,000 to $75,000. We had the option of selecting either a Base Rate interest rate plus a variable margin based on our First Lien Net Leverage Ratio (ranging from 2.0% to 2.5%) or a Eurodollar Rate interest rate for one, two, three or six months plus a variable margin based on our First Lien Net Leverage Ratio (ranging from 3.0% to 3.5%).

In June 2021, we entered into Amendment No. 2 to our Amended and Restated First Lien Credit Agreement that (i) increased the maximum available borrowing capacity under the Revolving Commitment from $75,000 to $150,000 and (ii) extended the maturity date of the Revolving Commitment to the earliest to occur of (a) June 4, 2026, (b) the date that is six months prior to the maturity date of the First Lien Term Loan (provided that clause (b) shall not apply if the maturity date for the First Lien Term Loan is extended to a date that is at least six months after June 4, 2026, the First Lien Term Loan is refinanced having a maturity date at least six months after June 4, 2026, or the First Lien Term Loan is paid in full), (c) the date that commitments under the Revolving Commitment are permanently reduced to zero, and (d) the date of the termination of the commitments under the Revolving Commitment. The increase to the maximum available borrowing capacity was effected on the close of our initial public offering in June 2021.

In March 2024, we entered into Amendment No. 5 to our Amended and Restated First Lien Credit Agreement that consists of $150,000 to replace our existing Revolving Commitments and $150,000 in additional incremental Revolving Commitments. The amendment also updates the interest rate for these loans to SOFR or Base Rate, at our option, plus an applicable margin (2.50% for SOFR Loans or 1.50% for Base Rate Loans), subject to step-ups and step-downs based on the First Lien Net Leverage Ratio. Any unused commitment fee is also payable based on the First Lien Net Leverage Ratio. The Credit Agreement requires the Borrower to maintain a Rent Adjusted Total Net Leverage Ratio no greater than 6.50 to 1.00, tested quarterly beginning with the quarter ending September 30, 2024, for the benefit of lenders holding the Revolving Commitments. The Amendment also extends the time in which we can draw revolving loans under the Revolving Commitments until the earliest of March 2029.

As of March 31, 2024 and December 31, 2023, there were no amounts outstanding under the Revolving Commitments.

The maximum available borrowing capacity under the Revolving Commitments is reduced by outstanding letters of credit under the Revolving Commitments. As of March 31, 2024 and December 31, 2023, the available borrowing capacity under the Revolving Commitments was $299,716 and $149,193, respectively.

In addition, an unused commitment fee based on our First Lien Net Leverage Ratio is payable on the average of the unused borrowing capacity under the Revolving Commitments. As of March 31, 2024 and December 31, 2023, the unused commitment fee was 0.25%.

Standby Letters of Credit

14


 

As of March 31, 2024, we have a letter of credit sublimit of $90,000 under the Revolving Commitments, provided that the total utilization of revolving commitments under the Revolving Commitment does not exceed $300,000. Any letter of credit issued under the Amended and Restated Credit Agreement has an expiration date which is the earlier of (i) no later than 12 months from the date of issuance or (ii) five business days prior to the maturity date of the Revolving Commitments, as amended under Amendment No. 2 to the Amended and Restated First Lien Credit Agreement. Letters of credit under the Revolving Commitments reduce the maximum available borrowing capacity under the Revolving Commitment. As of March 31, 2024 and December 31, 2023, the amounts associated with outstanding letters of credit were $284 and $807, respectively.

 

9. Fair Value Measurements

The following table presents financial liabilities which are measured at fair value on a recurring basis as of March 31, 2024:

 

 

Fair Value Measurements

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan

$

5,922

 

 

$

5,922

 

 

$

-

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan

$

4,097

 

 

$

4,097

 

 

$

-

 

 

$

-

 

Contingent Consideration

$

4,750

 

 

$

-

 

 

$

-

 

 

$

4,750

 

The following table presents financial liabilities which are measured at fair value on a recurring basis as of December 31, 2023:

 

Fair Value Measurements

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan

$

5,553

 

 

$

5,553

 

 

$

-

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan

$

3,961

 

 

$

3,961

 

 

$

-

 

 

$

-

 

Contingent Consideration

$

4,750

 

 

$

-

 

 

$

-

 

 

$

4,750

 

 

We measure the fair value of our financial assets and liabilities using the highest level of inputs that are available as of the measurement date. The carrying amounts of cash, accounts receivable, and accounts payable approximate their fair value due to the immediate or short-term maturity of these financial instruments.

We maintain a deferred compensation plan for a select group of our highly compensated employees, in which certain of our executive officers participate in. The plan allows eligible participants to defer up to 90% of their base salary and/or incentive plan compensation as well as any refunds from our 401(k) Plan. Participants may elect investment funds selected by the Company in whole percentages. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds. These investment funds consist primarily of equity securities, such as common stock and mutual funds, and fixed income securities and are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. These investment options do not represent actual ownership of or ownership rights in the applicable funds; they serve the purpose of valuing the account and the corresponding obligation of the Company.

 

As of March 31, 2024 and December 31, 2023, the fair value of our First Lien Term Loan approximated its carrying value due to the debt’s variable interest rate terms.

As of March 31, 2024 and December 31, 2023, we held no assets in cash investments.

We recognized a Level 3 contingent consideration liability in connection with the Downtowner Car Wash acquisition in December 2021. We measured its contingent consideration liability using Level 3 unobservable inputs. The contingent consideration liability is associated with the achievement of certain targets and is estimated at each balance sheet date by considering among other factors, results of completed periods and our most recent financial projection for future periods subject to earn-out payments. There are two components to the contingent consideration: a payment when we obtained the certificate of occupancy for the car wash and opened it to the public in 2023 and an annual payment

15


 

based on certain financial metrics of the acquired business. A change in the forecasted revenue or projected opening dates could result in a significantly lower or higher fair value measurement. We determined that there were no significant changes to the unobservable inputs that would have resulted in a change in fair value of this contingent consideration liability at March 31, 2024. During the three months ended March 31, 2023, a payment of $500 was made upon receipt of certificate of occupancy.

During the three months ended March 31, 2024 and 2023, there were no transfers between fair value measurement levels.

10. Leases

Balance sheet information related to leases consisted of the following for the periods presented:

 

 

 

 

 

As of

 

 

 

Classification

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

 

 

Operating

 

Operating right of use assets, net

 

$

836,528

 

 

$

833,547

 

Finance

 

Property and equipment, net

 

 

13,064

 

 

 

13,315

 

Total lease assets

 

 

 

$

849,592

 

 

$

846,862

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating

 

Current maturities of operating lease liability

 

$

44,850

 

 

$

43,979

 

Finance

 

Current maturities of finance lease liability

 

 

766

 

 

 

746

 

Long-term

 

 

 

 

 

 

 

 

Operating

 

Operating lease liability

 

 

810,783

 

 

 

809,409

 

Finance

 

Financing lease liability

 

 

13,833

 

 

 

14,033

 

Total lease liabilities

 

 

 

$

870,232

 

 

$

868,167

 

 

Components of total lease cost, net, consisted of the following for the periods presented:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Operating lease expense(a)

 

$

27,212

 

 

$

24,011

 

Finance lease expense

 

 

 

 

 

 

Amortization of lease assets

 

 

251

 

 

 

251

 

Interest on lease liabilities

 

 

264

 

 

 

276

 

Short-term lease expense

 

 

51

 

 

 

14

 

Variable lease expense(b)

 

 

7,264

 

 

 

6,703

 

Total

 

$

35,042

 

 

$

31,255

 

a)
Operating lease expense includes an immaterial amount of sublease income and is included in other store operating expenses and general and administrative expenses in the accompanying condensed consolidated statements of operations.
b)
Variable lease costs consist of property taxes, property insurance, and common area or other maintenance costs for our leases of land and buildings and is included in other store operating expenses in the accompanying condensed consolidated statements of operations.

16


 

The following includes supplemental information for the periods presented:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating cash flows from operating leases

 

$

26,517

 

 

$

23,766

 

Operating cash flows from finance leases

 

$

264

 

 

$

276

 

Financing cash flows from finance leases

 

$

180

 

 

$

161

 

 

 

 

 

 

 

 

Operating lease ROU assets obtained in exchange for lease liabilities

 

$

14,710

 

 

$

10,527

 

 

 

 

 

 

 

 

Weighted-average remaining operating lease term

 

 

13.76

 

 

 

13.95

 

Weighted-average remaining finance lease term

 

 

15.38

 

 

 

16.17

 

 

 

 

 

 

 

 

Weighted-average operating lease discount rate

 

 

8.11

%

 

 

7.43

%

Weighted-average finance lease discount rate

 

 

7.33

%

 

 

7.33

%

 

As of March 31, 2024, lease obligation maturities were as follows:

 

Fiscal Year Ending:

 

Operating Leases

 

 

Finance Leases

 

2024 (remaining nine months)

 

$

80,624

 

 

$

1,336

 

2025

 

 

108,557

 

 

 

1,786

 

2026

 

 

107,598

 

 

 

1,792

 

2027

 

 

103,836

 

 

 

1,819

 

2028

 

 

97,880

 

 

 

1,846

 

Thereafter

 

 

963,795

 

 

 

18,425

 

Total future minimum obligations

 

$

1,462,290

 

 

$

27,004

 

Less: Present value discount

 

 

(606,657

)

 

 

(12,405

)

Present value of net future minimum lease obligations

 

$

855,633

 

 

$

14,599

 

Less: current portion

 

 

(44,850

)

 

 

(766

)

Long-term obligations

 

$

810,783

 

 

$

13,833

 

 

Forward-Starting Leases

As of March 31, 2024, we entered into 13 leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2024 through 2026 with initial lease terms of 15 to 20 years.

As of December 31, 2023, we entered into 14 leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2024 through 2026 with initial lease terms of 15 to 20 years.

Sale-Leaseback Transactions

During the three months ended March 31, 2024, we completed one sale-leaseback transaction related to one car wash location with aggregate consideration of $4,900, resulting in a net gain of $1,697, which is included in Gain on sale of assets in the accompanying condensed consolidated statements of operations. Contemporaneously with the closing of the sale, we entered into a lease agreement for the property for an initial 20-year term. For the sale-leaseback transaction consummated in the three months ended March 31, 2024, the cumulative initial annual rent for the property was approximately $306, subject to annual escalations. This lease is accounted for as an operating lease.

During the three months ended March 31, 2023, we completed two sale-leaseback transactions related to car wash locations with aggregate consideration of $9,213, resulting in a net gain of $370, which are included in Gain on sale of assets in the accompanying condensed consolidated statements of operations. Contemporaneously with the closing of the

17


 

sales, we entered into lease agreements for the properties for initial 20-year terms. For the sale-leaseback transactions consummated in the three months ended March 31, 2023, the cumulative initial annual rent for the properties was approximately $559, subject to annual escalations. These leases are accounted for as operating leases.

11. Stockholders’ Equity

As of March 31, 2024, there were 1,000,000,000 shares of common stock authorized, 322,622,328 shares of common stock issued, and 317,835,082 shares of common stock outstanding.

As of December 31, 2023, there were 1,000,000,000 shares of common stock authorized, 318,366,628 shares of common stock issued, and 315,192,401 shares of common stock outstanding.

As of March 31, 2024 and December 31, 2023, there were 5,000,000 shares of preferred stock authorized and none were issued or outstanding.

We use the cost method to account for treasury stock. As of March 31, 2024 and December 31, 2023, we had 4,787,246 and 3,174,227 shares, respectively, of treasury stock. As of March 31, 2024 and December 31, 2023, the cost of treasury stock included in additional paid-in capital in the accompanying condensed consolidated balance sheets was $17,962 and $6,091, respectively.

12. Stock-Based Compensation

The 2014 Plan

Under the 2014 Stock Option Plan of Hotshine Holdings, Inc. (the “2014 Plan”), we may grant incentive stock options or nonqualified stock options to purchase shares of our common stock to our employees, directors, officers, outside advisors and non-employee consultants.

All stock options granted under the 2014 Plan are equity-classified and have a contractual life of ten years. Under the 2014 Plan, 60% of the shares in a grant contain service-based vesting conditions and vest ratably over a five-year period and 40% of the shares in a grant contain performance-based vesting conditions (“Performance Vesting Options”). The condition for the Performance Vesting Options is a change in control or an initial public offering, where (i) 50% of the Performance Vesting Options vest and become exercisable if the Principal Stockholders receive the Target Proceeds at the Measurement Date and (ii) the remaining 50% of the Performance Vesting Options vest and become exercisable if the Principal Stockholders receive the Maximum Amount at the Measurement Date. In June 2021, we modified all outstanding shares of Performance Vesting Options to remove, subject to the successful completion of the IPO, the requirement that the Principal Stockholders receive the Target Proceeds and the Maximum Amount as conditions for the Performance Vesting Options to vest. The exercise prices for stock options granted under the 2014 Plan were not less than the fair market value of the common stock of the Company on the date of grant. For the avoidance of doubt, the IPO constituted a performance measurement date under the applicable option agreements for the Performance Vesting Options and the Performance Vesting Options vested in full in connection with the IPO.

The 2021 Plan

In June 2021, the Board adopted the 2021 Incentive Award Plan (the “2021 Plan”), which was subsequently approved by our stockholders and became effective on June 25, 2021. Under the 2021 Plan, we may grant incentive stock options, nonqualified stock options, restricted stock units ("RSUs"), restricted stock, and other stock- or cash-based awards to its employees, directors, officers, and non-employee consultants. Initially, the maximum number of shares of our common stock that may be issued under the 2021 Plan is 29,800,000 new shares of common stock, which includes 256,431 shares of common stock that remained available for issuance under the 2014 Plan at June 25, 2021. In connection with the IPO, stock option and RSU awards were granted with respect to 3,726,305 shares. Any shares of common stock subject to outstanding stock awards granted under the 2014 Plan and, following June 25, 2021, terminate, expire or are otherwise forfeited, reacquired or withheld will become available for issuance under the 2021 Plan.

All stock options granted under the 2021 Plan are equity-classified and have a contractual life of ten years. Under the 2021 Plan, the stock options contain service-based vesting conditions and generally vest ratably over a three- or five-year period (collectively with stock options under the 2014 Plan, the “Time Vesting Options”). The exercise prices for stock options granted under the 2021 Plan were not less than the fair market value of the common stock of the Company on the date of grant.

RSUs granted under the 2021 Plan are equity-classified and contain service-based conditions and generally vest ratably over one- to five-year periods. Each RSU represents the right to receive one share of our common stock upon vesting. The fair value is calculated based upon our closing stock price on the date of grant, and the stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period.

 

18


 

The 2014 Plan and 2021 Plan are administered by the Board or, at the discretion of the Board, by a committee thereof. The exercise prices for stock options, the vesting of awards, and other restrictions are determined at the discretion of the Board, or its committee if so delegated.

The 2021 ESPP

In June 2021, the Board adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”), which was subsequently approved by our stockholders and became effective in June 2021. The 2021 ESPP authorizes the initial issuance of up to 5,000,000 shares of our common stock to eligible employees of the Company or, as designated by the Board, employees of a related company. The 2021 ESPP provides for offering periods not to exceed 27 months, and each offering period will include purchase periods. We determined that offering periods would commence at approximately the six-month period beginning with an enrollment date and ending with the next exercise date, except that the first offering period commenced on the effective date of our registration statement and ended on November 9, 2021.

 

The 2021 ESPP provides that the number of shares reserved and available for issuance under the 2021 ESPP will automatically increase on January 1 of each calendar year from January 1, 2022 through January 1, 2031 by an amount equal to the lesser of (i) 0.5% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) such lesser number of shares of common stock as determined by the Board. The number of shares reserved and available for issuance under the 2021 ESPP as of January 1, 2024 is 8,463,759.

 

Share-Based Payment Valuation

The grant date fair value of Time Vesting Options granted is determined using the Black-Scholes option-pricing model. The grant date fair value of Performance Vesting Options is determined using a Monte Carlo simulation model and a barrier-adjusted Black-Scholes option-pricing model. The grant date fair value of stock purchase rights granted under the 2021 ESPP is determined using the Black-Scholes option-pricing model.

2021 ESPP Valuation

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock purchase rights granted under the 2021 ESPP during the periods presented:

 

 

Three Months Ended March 31,

 

2024

 

2023

Expected volatility

49.59%

 

53.90%

Risk-free interest rate

5.38%

 

4.53%

Expected term (in years)

0.49

 

0.49

Expected dividend yield

None

 

None

 

Time Vesting Options

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of Time Vesting Options granted under the 2021 Plan during the periods presented:

 

Three Months Ended March 31,

 

2024

 

2023

Expected volatility

-

 

43.74%

Risk-free interest rate

-

 

4.21%

Expected term (in years)

-

 

6.26

Expected dividend yield

-

 

None

 

 

19


 

Stock Options

A summary of our stock option activity during the period presented is as follows:

 

 

Time Vesting Options

 

 

Performance Vesting Options

 

 

Total Number of Stock Options

 

 

Weighted-Average Exercise Price

 

Outstanding as of December 31, 2023

 

11,744,894

 

 

 

7,705,114

 

 

 

19,450,008

 

 

$

3.21

 

Granted

 

-

 

 

 

-

 

 

 

-

 

 

$

-

 

Exercised

 

(1,741,496

)

 

 

(2,374,795

)

 

 

(4,116,291

)

 

$

0.65

 

Forfeited

 

(80,902

)

 

 

-

 

 

 

(80,902

)

 

$

9.32

 

Outstanding as of March 31, 2024

 

9,922,496

 

 

 

5,330,319

 

 

 

15,252,815

 

 

$

3.87

 

Options vested or expected to vest as of March 31, 2024

 

9,543,934

 

 

 

5,330,319

 

 

 

14,874,253

 

 

$

7.43

 

Options exercisable as of March 31, 2024

 

6,787,551

 

 

 

5,330,319

 

 

 

12,117,870

 

 

$

2.31

 

 

The number and weighted-average grant date fair value of stock options during the period presented are as follows:

 

 

Number of Stock Options

 

Weighted-Average
Grant Date Fair Value

 

 

Time Vesting Options

 

 

Performance Vesting Options

 

Time Vesting Options

 

 

Performance Vesting Options

 

Non-vested as of December 31, 2023

 

3,629,454

 

 

-

 

$

4.39

 

 

$

-

 

Non-vested as of March 31, 2024

 

3,134,947

 

 

-

 

$

4.54

 

 

$

-

 

Granted during the period

 

-

 

 

-

 

$

-

 

 

$

-

 

Vested during the period

 

445,598

 

 

-

 

$

3.51

 

 

$

-

 

Forfeited/canceled during the period

 

48,909

 

 

-

 

$

4.15

 

 

$

-

 

 

There were no Time Vesting Options or Performance Vesting Options granted during the three months ended March 31, 2024.

The fair value of shares attributable to stock options that vested during the three months ended March 31, 2024 was $3,565.

As of March 31, 2024, the weighted-average remaining contractual life of outstanding stock options was approximately 4.13 years.

Restricted Stock Units

The following table summarizes our RSU activity since December 31, 2023:

 

 

Restricted Stock Units

 

 

Weighted-Average Grant Date Fair Value

 

Unvested as of December 31, 2023

 

3,718,505

 

 

$

9.98

 

Granted

 

3,203

 

 

$

8.98

 

Vested

 

(139,409

)

 

$

9.26

 

Forfeited

 

(117,665

)

 

$

9.58

 

Unvested as of March 31, 2024

 

3,464,634

 

 

$

10.02

 

 

20


 

 

We granted 3,203 RSUs with a grant date fair value of $29 during the three months ended March 31, 2024.

The fair value of shares attributable to RSUs that vested during the three months ended March 31, 2024 was $1,120.

As of March 31, 2024, the weighted-average remaining contractual life of outstanding RSUs was approximately 8.71 years.

Stock-Based Compensation Expense

We estimated a forfeiture rate of 8.82% for awards with service-based vesting conditions based on historical experience and future expectations of the vesting of these share-based payments. We used this rate as an assumption in calculating stock-based compensation expense for Time Vesting Options, RSUs, and stock purchase rights granted under the 2021 ESPP.

Total stock-based compensation expense, by caption, recorded in the condensed consolidated statements of operations for the periods presented is as follows:

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Cost of labor and chemicals

$

2,473

 

 

$

2,050

 

General and administrative

 

3,773

 

 

 

3,311

 

Total stock-based compensation expense

$

6,246

 

 

$

5,361

 

 

Total stock-based compensation expense, by award type, recorded in the condensed consolidated statements of operations for the periods presented is as follows:

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Time Vesting Options

$

1,577

 

 

$

1,596

 

RSUs

 

4,407

 

 

 

3,479

 

2021 ESPP

 

262

 

 

 

286

 

Total stock-based compensation expense

$

6,246

 

 

$

5,361

 

As of March 31, 2024, total unrecognized compensation expense related to unvested Time Vesting Options was $5,548, which is expected to be recognized over a weighted-average period of 2.07 years.

As of March 31, 2024, there was no unrecognized compensation expense related to unvested Performance Vesting Options as the completion of the IPO satisfied the performance condition and as a result, all outstanding Performance Vesting Options vested.

As of March 31, 2024, total unrecognized compensation expense related to unvested RSUs was $13,244, which is expected to be recognized over a weighted-average period of 2.01 years.

As of March 31, 2024, total unrecognized compensation expense related to unvested stock purchase rights under the 2021 ESPP was $136, which is expected to be recognized over a weighted-average period of 0.12 years.

13. Business Combinations

From time to time, we may pursue acquisitions of conveyorized car washes that either strategically fit with the business or expand our presence in new and attractive markets.

We account for business combinations under the acquisition method of accounting. The assets acquired and liabilities assumed in connection with business acquisitions are recorded at the date of acquisition at their estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired and intangible assets assigned, recorded as goodwill. Significant judgment is required in estimating the fair value of assets acquired and liabilities assumed and in assigning their respective useful lives. Accordingly, we may engage third-party valuation specialists to assist in these determinations. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management; but are inherently uncertain.

21


 

The condensed consolidated financial statements reflect the operations of an acquired business starting from the effective date of the acquisition. No acquisition-related costs were expensed during the three months ended March 31, 2024 and 2023. Acquisition-related costs are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

2024 Acquisitions

We did not consummate any acquisitions during the three months ended March 31, 2024.

2023 Acquisitions

For the year ended December 31, 2023, we acquired the assets and liabilities of six conveyorized car washes in two acquisitions for total consideration of approximately $51,217, which was paid in cash. These acquisitions resulted in the preliminary recognition of $24,919 of goodwill, $22,555 of property and equipment, $3,580 of ROU assets, $640 of intangible assets, $101 of other net liabilities, and $376 of a bargain purchase gain. The bargain purchase gain is not material and is recorded within (gain) loss on sale of assets, net on the consolidated statements of operations. We do not believe these acquisitions are material to our overall consolidated financial statements.

 

The acquisitions were located in the following markets:

 

Location (Seller)

Number of Washes

 

Month Acquired

Arizona (Dynamite Car Wash)

1

 

April

California (Cruizers Car Wash)

5

 

July

 

14. Commitments and Contingencies

Litigation

From time to time, we are party to pending or threatened lawsuits arising out of or incident to the ordinary course of business. We carry professional and general liability insurance coverage and other insurance coverages. In the opinion of management and upon consultation with legal counsel, none of the pending or threatened lawsuits will have a material effect upon the consolidated financial position, operations, or cash flows of the Company.

 

Class Action Litigation

On February 14, 2023, a plaintiff filed a purported class action lawsuit in the Stanislaus County Superior Court, California, on behalf of all non-exempt employees employed by Defendants Prime Shine LLC in California any time between February 14, 2019, and the present, against Prime Shine, LLC and Does 1 – 20 inclusive. Plaintiff alleges eight claims for violations of the California Labor Code and one claim for violation of the California Business & Professions Code. On June 13, 2023, Plaintiff filed a First Amended Complaint to add a claim for penalties pursuant to the Private Attorneys General Act. Plaintiff seeks, among other things, an unspecified amount for unpaid wages, actual, consequential, and incidental losses, penalties, and attorneys’ fees and costs. The parties agreed to an informal exchange of information in lieu of formal discovery prior to mediation with an experienced wage-and-hour mediator. In October 2023, following mediation, both parties agreed to settle the lawsuit. A financial amount was accrued that was not material to our consolidated financial statements. A formal written settlement agreement has been executed by the parties, however, final settlement and resolution is contingent upon the satisfaction of certain conditions including subsequent approval from the California Department of Labor and the court. Should all these conditions be met, the class action lawsuit will be considered settled.

Insurance

We carry a broad range of insurance coverage, including general and business auto liability, commercial property, workers’ compensation, cyber risk, and general umbrella policies. As of March 31, 2024 and December 31, 2023, we accrued $4,982 and $4,311, respectively, for assessments on insurance claims filed, which are included in other accrued expenses in the accompanying condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, we recorded $4,380 and $3,686, respectively, in receivables from its non-healthcare insurance carriers related to these insurance claims, which are included in other receivables in the accompanying condensed consolidated balance sheets. The receivables are paid when the claim is finalized and the reserved amounts on these claims are expected to be paid within one year.

22


 

Environmental Matters

Operations at certain facilities currently or previously owned or leased by us utilize, or in the past have utilized, hazardous substances generally in compliance with applicable law. Periodically, we have had minor claims asserted against it by regulatory agencies or private parties for environmental matters relating to the handling of hazardous substances by us, and we have incurred obligations for investigations or remedial actions with respect to certain of these matters. There can be no assurances that activities at these facilities, or future facilities owned or operated by us, may not result in additional environmental claims being asserted against us or additional investigations or remedial actions being required. We are not aware of any significant remediation matters as of March 31, 2024. Because of various factors including the difficulty of identifying the responsible parties for any particular site, the complexity of determining the relative liability among them, the uncertainty as to the most desirable remediation techniques and the amount of damages and clean-up costs and the time period during which such costs may be incurred, we are unable to reasonably estimate the ultimate cost of claims asserted against us related to environmental matters; however, we do not believe such costs will be material to our condensed consolidated financial statements.

In addition to potential claims asserted against us, there are certain regulatory obligations associated with these facilities. We also have a third-party specialist to review the sites subject to these regulations annually, for the purpose of assigning future cost. A third party has conducted a preliminary assessment of site restoration provisions arising from these regulations and we have recognized a provisional amount. As of March 31, 2024 and December 31, 2023, our accrual for environmental remediation was $15, which is included in other accrued expenses in the accompanying condensed consolidated balance sheets.

 

23


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our 2023 Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in other parts of this Quarterly Report on Form 10-Q and 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 2023 Form 10-K.

Who We Are

Mister Car Wash, Inc. is the largest national car wash brand, primarily offering express exterior cleaning services, with interior cleaning services at select locations, across 482 car washes in 21 states as of March 31, 2024. Founded in 1996, we employ an efficient, repeatable, and scalable process, which we call the “Mister Experience,” to deliver a clean, dry, and shiny car every time. The core pillars of the “Mister Experience” are greeting every customer with a wave and smile, providing the highest quality car wash, and delivering the experience quickly and conveniently. We offer a monthly subscription program, which we call the Unlimited Wash Club® (“UWC”), as a flexible, quick, and convenient option for customers to keep their cars clean. Our scale and over 25 years of innovation allow us to drive operating efficiencies and invest in training, infrastructure, and technology that improve speed of service, quality, and sustainability and realize strong financial performance.

Factors Affecting Our Business and Trends

We believe that our business and growth depend on a number of factors that present significant opportunities for us and may involve risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” of our 2023 Form 10-K.

Growth in comparable store sales. Comparable store sales have been a driver of our net revenue growth and we expect it to continue to play a key role in our future growth and profitability. We will seek to continue to grow our comparable store sales by increasing the number of UWC Members, maximizing efficiency and throughput of our car wash locations, optimizing marketing spend to add new customers, and increasing customer visitation frequency.

Number and loyalty of UWC Members. The UWC program is a critical element of our business. UWC Members contribute a significant portion of our net revenue and provide recurring revenue through their monthly membership fees.

Labor management. Hiring and retaining skilled team members and experienced management represents one of our largest costs. We believe people are the key to our success and we have been able to successfully attract and retain engaged, high-quality team members by paying competitive wages, offering attractive benefit packages, and providing robust training and development opportunities. While the competition for skilled labor is intense and subject to high turnover, we believe our approach to wages and benefits will continue to allow us to attract suitable team members and management to support our growth.

Factors Affecting the Comparability of Our Results of Operations

Our results have been affected by, and may in the future be affected by, the following factors, which must be understood in order to assess the comparability of our period-to-period financial performance and condition.

Greenfield Location Development

More recently, a component of our growth strategy has been to grow through greenfield development of Mister Car Wash locations, with particular focus on Express Exterior Locations, and we anticipate further pursuit of this strategy in the future. In the three months ended March 31, 2024, we successfully opened six greenfield locations, and we expect to drive the majority of our future location growth through greenfield development. We believe such a strategy will drive a more controllable pipeline of unit growth for future locations in existing and adjacent markets.

The comparability of our results may be impacted by the inclusion of financial performance of greenfield locations that have not delivered a full fiscal year of financial results nor matured to average unit volumes, which we typically expect after approximately three full years of operation.

 

24


 

Acquisitions

In the three months ended March 31, 2024, we did not consummate any acquisitions.

Following an acquisition, we implement a variety of operational improvements to unify branding and enhance profitability. As soon as feasible, we fully integrate and transition acquired locations to the “Mister” brand and make investments to improve site flow, upgrade tunnel equipment and technology, and install our proprietary Unity Chemical system, which is a unique blend of our signature products utilizing the newest technology and services to make a better car wash experience for our customers. We also establish member-only lanes, optimize service offerings and implement training initiatives that we have successfully utilized to improve team member engagement and drive UWC growth post-acquisition. The costs associated with these onboarding initiatives, which vary by site, can impact the comparability of our results.

The comparability of our results may also be impacted by the inclusion of financial performance of our acquisitions that have not delivered a full fiscal year of financial results under Mister Car Wash’s ownership.

See Note 13 Business Combinations to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional discussion.

Key Performance Indicators

We prepare and analyze various operating and financial data to assess the performance of our business and to help in the allocation of our resources. The key operating performance and financial metrics and indicators we use are set forth below, as of and for the three months ended March 31, 2024 and 2023.

 

 

Three Months Ended March 31,

 

(Dollars in thousands)

2024

 

 

2023

 

Financial and Operating Data

 

 

 

 

 

Location count (end of period)

 

482

 

 

 

439

 

Comparable store sales growth

 

0.9

%

 

 

(1.6

)%

UWC Members (in thousands, end of period)

 

2,112

 

 

 

2,006

 

UWC sales as a percentage of total wash sales

 

74

%

 

 

69

%

Net income

$

16,637

 

 

$

21,136

 

Net income margin

 

7.0

%

 

 

9.4

%

Adjusted EBITDA

$

75,172

 

 

$

70,976

 

Adjusted EBITDA margin

 

31.4

%

 

 

31.4

%

 

Location Count (end of period)

Our location count refers to the total number of car wash locations at the end of a period, inclusive of new greenfield locations, acquired locations and offset by closed locations. The total number of locations that we operate, as well as the timing of location openings, acquisitions, and closings, have, and will continue to have, an impact on our performance. In the three months ended March 31, 2024, we increased our location count by the six greenfield locations noted above.

Our Express Exterior Locations, which offer express exterior cleaning services, comprise 414 of our current locations and our Interior Cleaning Locations, which offer both express exterior cleaning services and interior cleaning services, comprise 68 of our current locations.

Comparable Store Sales Growth

We consider a location a comparable store on the first day of the 13th full calendar month following a greenfield location’s first day of operations, or for acquired locations, the first day of the 13th full calendar month following the date of acquisition. A location converted from an Interior Cleaning Location format to an Express Exterior Location format is excluded when the location did not offer interior cleaning services in the current period but did offer interior cleaning services in the prior year period. Comparable store sales growth is the percentage change in total wash sales of all comparable store car washes.

Opening new locations is a component of our growth strategy and as we continue to execute on our growth strategy, we expect that a significant portion of our sales growth will be attributable to non-comparable store sales. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy. For the three months ended March 31, 2024, comparable store sales increased to 0.9% compared to a decrease of 1.6% in the three months ended March 31, 2023.

 

25


 

UWC Members (end of period)

Members of our monthly subscription service are known as Unlimited Wash Club Members, or UWC Members. We view the number of UWC Members and the growth in the number of UWC Members on a net basis from period to period as key indicators of our revenue growth. The number of UWC Members has grown over time as we have acquired new customers and retained previously acquired customers. There were approximately 2.1 million and approximately 2.0 million UWC Members as of March 31, 2024 and March 31, 2023, respectively. There were approximately 2.1 million UWC Members as of December 31, 2023.

Our UWC Members grew by approximately 5% from March 31, 2023 through March 31, 2024 and approximately 2% from December 31, 2023 through March 31, 2024.

UWC Sales as a Percentage of Total Wash Sales

UWC sales as a percentage of total wash sales represents the penetration of our subscription membership program as a percentage of our overall wash sales. Total wash sales are defined as the net revenue generated from express exterior cleaning services and interior cleaning services for both UWC Members and retail customers. UWC sales as a percentage of total wash sales is calculated as sales generated from UWC Members as a percentage of total wash sales. We have consistently grown this measure over time as we educate customers as to the value of our UWC subscription offering. UWC sales were 74% and 69% of our total wash sales for the three months ended March 31, 2024 and 2023, respectively.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Adjusted EBITDA is defined as net income before interest expense, net, income tax provision, depreciation and amortization expense, (gain) loss on sale of assets, stock-based compensation expense, acquisition expenses, non-cash rent expense, loss on extinguishment of debt, and other nonrecurring charges. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenues for a given period.

We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in future periods, and any such modification may be material. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

Our management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA in connection with establishing discretionary annual incentive compensation; to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and because our Amended and Restated First Lien Credit Agreement uses measures similar to Adjusted EBITDA to measure our compliance with certain covenants.

Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations include:

Adjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments;

Adjusted EBITDA does not reflect changes in our cash requirements for our working capital needs;

Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt;

Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized;

Adjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation;

Adjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters we do not find indicative of our ongoing operations; and

other companies in our industry may calculate Adjusted EBITDA differently than we do.

 

26


 

The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented.

 

 

 

Three Months Ended March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Reconciliation of net income to Adjusted EBITDA:

 

 

 

 

 

 

Net income

 

$

16,637

 

 

$

21,136

 

Interest expense, net

 

 

20,024

 

 

 

17,748

 

Income tax provision

 

 

9,191

 

 

 

6,698

 

Depreciation and amortization expense

 

 

19,595

 

 

 

17,307

 

Gain on sale of assets (a)

 

 

(1,533

)

 

 

(63

)

Stock-based compensation expense (b)

 

 

6,802

 

 

 

5,361

 

Acquisition expenses (c)

 

 

565

 

 

 

459

 

Non-cash rent expense (d)

 

 

1,487

 

 

 

1,030

 

Loss on extinguishment of debt

 

 

1,882

 

 

 

-

 

Employee retention credit (e)

 

 

(5,189

)

 

 

-

 

Other (f)

 

 

5,711

 

 

 

1,300

 

Adjusted EBITDA

 

$

75,172

 

 

$

70,976

 

Net revenues

 

$

239,183

 

 

$

225,960

 

Adjusted EBITDA margin

 

 

31.4

%

 

 

31.4

%

(a)
Consists of gains and losses on the disposition of assets associated with sale-leaseback transactions, store closures or the sale of property and equipment.
(b)
Represents non-cash expense associated with our stock-based compensation as well as related taxes.
(c)
Represents expenses incurred in strategic acquisitions, including professional fees for accounting and auditing services, appraisals, legal fees and financial services, one-time costs associated with supplies for rebranding the acquired stores, and distinct travel expenses for related, distinct integration efforts by team members who are not part of our dedicated integration team, as well as expenses associated with greenfield construction.
(d)
Represents the difference between cash paid for rent expense and U.S. GAAP rent expense.
(e)
See Note 2 Summary of Significant Accounting Policies to our condensed consolidated financial statements for additional information on the employee retention credit.
(f)
Consists of other items as determined by management not to be reflective of our ongoing operating performance, such as costs associated with severance pay, non-deferred legal fees and other expenses related to credit agreement amendments, legal settlements and legal fees related to contract terminations, and nonrecurring strategic project costs.

 

The Adjusted EBITDA results in the three months ended March 31, 2024 when compared to the prior year period are primarily attributable to the increase in car wash sales due to growth in UWC members and the year-over-year addition of 43 locations.

 

 

 

 

 

 

 

 

27


 

Results of Operations for the Three Months Ended March 31, 2024 and 2023

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

(Dollars in thousands)

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

Net revenues

 

$

239,183

 

 

 

100

%

 

$

225,960

 

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Store operating costs:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of labor and chemicals

 

 

71,658

 

 

 

30

%

 

 

66,792

 

 

 

30

%

Other store operating expenses

 

 

96,803

 

 

 

40

%

 

 

89,466

 

 

 

40

%

General and administrative

 

 

29,710

 

 

 

12

%

 

 

24,183

 

 

 

11

%

Gain on sale of assets

 

 

(1,533

)

 

 

(1

)%

 

 

(63

)

 

 

(0

)%

Total costs and expenses

 

 

196,638

 

 

 

82

%

 

 

180,378

 

 

 

80

%

Operating income

 

 

42,545

 

 

 

18

%

 

 

45,582

 

 

 

20

%

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

20,024

 

 

 

8

%

 

 

17,748

 

 

 

8

%

Loss on extinguishment of debt

 

 

1,882

 

 

 

1

%

 

 

-

 

 

 

0

%

Other income

 

 

(5,189

)

 

 

(2

)%

 

 

-

 

 

 

0

%

Total other expense, net

 

 

16,717

 

 

 

7

%

 

 

17,748

 

 

 

8

%

Income before taxes

 

 

25,828

 

 

 

11

%

 

 

27,834

 

 

 

12

%

Income tax provision

 

 

9,191

 

 

 

4

%

 

 

6,698

 

 

 

3

%

Net income

 

 

16,637

 

 

 

7

%

 

 

21,136

 

 

 

9

%

 

Net Revenues

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Net revenues

 

$

239,183

 

 

$

225,960

 

 

$

13,223

 

 

 

6

%

 

The increase in net revenues was primarily attributable to the increase in car wash sales due to growth in UWC Members and the year-over-year addition of 43 locations.

Store Operating Costs

Cost of Labor and Chemicals

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Cost of labor and chemicals

 

$

71,658

 

 

$

66,792

 

 

$

4,866

 

 

 

7

%

Percentage of net revenues

 

 

30

%

 

 

30

%

 

 

 

 

 

 

 

The increase in cost of labor and chemicals is primarily attributable to an increase in volume and the year-over-year addition of 43 locations, as well as some inflationary pressures on store labor.

Other Store Operating Expenses

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Other store operating expenses

 

$

96,803

 

 

$

89,466

 

 

$

7,337

 

 

 

8

%

Percentage of net revenues

 

 

40

%

 

 

40

%

 

 

 

 

 

 

 

The increase in other store operating expenses was primarily attributable to the year-over-year addition of 43 locations, an increase in rent expense of approximately $3.2 million with the addition of 47 new land and building leases, an increase in property taxes of approximately $1.3 million and an increase in equipment and facilities maintenance expenses of approximately $1.2 million.

28


 

General and Administrative

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

General and administrative

 

$

29,710

 

 

$

24,183

 

 

$

5,527

 

 

 

23

%

Percentage of net revenues

 

 

12

%

 

 

11

%

 

 

 

 

 

 

 

The increase in general and administrative expenses was primarily driven by approximately $4.2 million in third party costs related to our debt refinancing in March, $0.5 million in stock-based compensation costs and approximately $0.5 million due to tax advisory costs associated with the assessment of our employee retention credit. As a percentage of net revenues, general and administrative expenses for the three months ended March 31, 2024 remained consistent to the prior year period.

Gain on Sale of Assets

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Gain on sale of assets

 

$

(1,533

)

 

$

(63

)

 

$

(1,470

)

 

 

2,333

%

Percentage of net revenues

 

 

(1

)%

 

 

(0

)%

 

 

 

 

 

 

 

The change in gain on sale of assets was primarily driven by gains associated with sale-leaseback activity in the current year.

Total Other Expense, net

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Total other expense, net

 

$

16,717

 

 

$

17,748

 

 

$

(1,031

)

 

 

(6

)%

Percentage of net revenues

 

 

7

%

 

 

8

%

 

 

 

 

 

 

 

Included in the current quarter's Total other expense, net is interest expense of approximately $20.0 million, which was up approximately $2.3 million due to higher average interest rates, loss on extinguishment of debt of approximately $1.9 million due to our debt refinancing during the current period, offset by a gain of approximately $5.2 million due to the recognition of an employee retention credit. Only interest expense was included in the prior year's Total other expense, net.

Income Tax Provision

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Income tax provision

 

$

9,191

 

 

$

6,698

 

 

$

2,493

 

 

 

37

%

Percentage of net revenues

 

 

4

%

 

 

3

%

 

 

 

 

 

 

 

The increase in income tax provision was primarily driven by the impact of net, income tax expense from equity awards in the current quarter.

Liquidity and Capital Resources

Funding Requirements

Our primary requirements for liquidity and capital are to fund our investments in our core business, which includes lease payments, pursue greenfield expansion, and acquisitions of new locations and to service our indebtedness. Historically, these cash requirements have been met through funds raised by the sale of our common stock, utilization of our Revolving Commitment, First Lien Term Loan, sale-leaseback transactions, and cash provided by operations.

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $10.7 million and $19.0 million, respectively, and $299.7 million and $149.2 million, respectively, of available borrowing capacity under our Revolving Commitment.

For a description of our credit facilities and our recent debt refinancing, please see Note 8 Debt in the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. As of March 31, 2024, we were in compliance with the covenants under the Amended and Restated First Lien Credit Agreement.

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We believe that our sources of liquidity and capital will be sufficient to finance our growth strategy and operations, as well as planned capital expenditures, for at least the next 12 months. However, we cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.

Cash Flows for the Three Months Ended March 31, 2024 and 2023

The following table presents our summary cash flows:

 

 

 

Three Months Ended March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Net cash provided by operating activities

 

$

57,990

 

 

$

67,017

 

Net cash used in investing activities

 

 

(76,944

)

 

 

(63,160

)

Net cash provided by financing activities

 

 

10,652

 

 

 

894

 

Net change in cash and cash equivalents, and restricted cash

 

$

(8,302

)

 

$

4,751

 

 

Operating Activities. Net cash used in operating activities consists of net income adjusted for certain non-cash items, including stock-based compensation expense, depreciation of property and equipment, gains on disposal of property and equipment, loss on extinguishment of debt, amortization of leased assets and deferred income taxes, as well as the effect of changes in other working capital amounts.

For the three months ended March 31, 2024, net cash provided by operating activities was $58.0 million and was comprised of net income of $16.6 million, increased by $46.4 million as a result of non-cash adjustments comprised primarily of depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, a gain on disposal of property and equipment, a loss on extinguishment of debt, and amortization of debt issuance costs. Changes in working capital balances decreased cash provided by operating activities by $5.0 million and were primarily driven by an increase in other receivables and decreases in current liabilities, partially offset by the increase in operating lease liability.

For the three months ended March 31, 2023, net cash provided by operating activities was $67.0 million and was comprised of net income of $21.1 million, increased by $39.2 million as a result of non-cash adjustments comprised primarily of depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, a gain on disposal of property and equipment, and amortization of debt issuance costs. Changes in working capital balances increased cash provided by operating activities by $6.7 million and were primarily driven by decreases in current assets and increases in current liabilities, partially offset by the decrease in operating lease liability.

Investing Activities. Our net cash used in investing activities primarily consists of purchases and sale of property and equipment.

For the three months ended March 31, 2024, net cash used in investing activities was $76.9 million and was primarily comprised of investments in property and equipment to support our greenfield development and other initiatives, offset by the sale of property and equipment.

For the three months ended March 31, 2023, net cash used in investing activities was $63.2 million and was primarily comprised of investment in property and equipment primarily to support our greenfield and other initiatives, partially offset by the sale of property and equipment.

 

Financing Activities. Our net cash provided by financing activities primarily consists of proceeds and payments on our First Lien Term Loan and Revolving Commitment, payments on finance lease obligations, as well as issuance of common stock under employee plans.

For the three months ended March 31, 2024, net cash provided by financing activities was $10.7 million and was primarily comprised of proceeds from our refinancing of the First Lien Term Loan and Revolving Commitment, partially offset by payments for repurchases of common stock for stock exercises, payments on debt borrowings and Revolving Commitment, and payments of deferred financing costs due to our debt refinancing.

For the three months ended March 31, 2023, net cash used by financing activities was $0.9 million and was primarily comprised of proceeds from exercise of stock options, partially offset by payments on finance lease obligations.

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Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, goodwill and other intangible assets, income taxes and stock-based compensation. We base our estimates on historical experience, current developments and on various other assumptions that we believe to be reasonable under these circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in our 2023 Form 10-K. There have been no material changes to our significant accounting policies during the three months ended March 31, 2024.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in interest rates and inflation. All these market risks arise in the normal course of business, as we do not engage in speculative trading activities. The following analysis provides quantitative information regarding these risks.

Interest Rate Risk

Our First Lien Term Loan bears interest at variable rates, which exposes us to market risks relating to changes in interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors, and other factors beyond our control. As of March 31, 2024 and December 31, 2023, we had $925.0 million and $901.2 million, respectively, of variable rate debt outstanding under our First Lien Term Loan. Based on the balance outstanding under our First Lien Term Loan as of March 31, 2024, an increase or decrease of 100 basis points in the effective interest rate on the First Lien Term Loan would cause an increase or decrease in interest expense of approximately $9 million over the next 12 months.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have recently experienced the effects of inflation on our results of operations and financial condition. In light of the current inflationary market conditions, we cannot assure you that our results of operations and financial condition will not be materially impacted by inflation in the future.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission (the "SEC") is recorded, processed, summarized and reported on a timely basis, we have developed and implemented disclosure controls and procedures. Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2024. Based on that evaluation, our management, including the President and Chief Executive Officer and the Chief Financial Officer, has concluded that our disclosure controls and procedures were effective as of March 31, 2024 in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are subjected from time-to-time to various claims, lawsuits and other legal proceedings, including intellectual property claims. Some of these claims, lawsuits and other legal proceedings involve highly complex issues, and often these issues are subject to substantial uncertainties. Accordingly, our potential liability with respect to a large portion of such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Management, with the assistance of legal counsel, periodically reviews the status of each significant matter and assesses potential financial exposure. We recognize provisions for claims or pending litigation when we determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. If management’s estimates prove incorrect, we could incur a charge to earnings which could have a material and adverse effect on our business, results of operations, and financial condition.

Class Action Litigation

On February 14, 2023, a plaintiff filed a purported class action lawsuit in the Stanislaus County Superior Court, California, on behalf of all non-exempt employees employed by Defendants Prime Shine LLC in California any time between February 14, 2019, and the present, against Prime Shine, LLC and Does 1 – 20 inclusive. Plaintiff alleges eight claims for violations of the California Labor Code and one claim for violation of the California Business & Professions Code. On June 13, 2023, Plaintiff filed a First Amended Complaint to add a claim for penalties pursuant to the Private Attorneys General Act. Plaintiff seeks, among other things, an unspecified amount for unpaid wages, actual, consequential, and incidental losses, penalties, and attorneys’ fees and costs. The parties agreed to an informal exchange of information in lieu of formal discovery prior to mediation with an experienced wage-and-hour mediator. In October 2023, following mediation, both parties agreed to settle the lawsuit. A financial amount was accrued that was not material to our consolidated financial statements. A formal written settlement agreement has been executed by the parties, however, final settlement and resolution is contingent upon the satisfaction of certain conditions including subsequent approval from the California Department of Labor and the court. Should all these conditions be met, the class action lawsuit will be considered settled.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed 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 2023 Form 10-K, before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks or uncertainties. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. There have been no material changes to the risk factors described in Part I. Item 1A. "Risk Factors" of our 2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Rule 10b5-1 Trading Plan Arrangements

During the quarter ended March 31, 2024, none of our directors or officers (as defined in Rule 16a-1 of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined under Item 408 of Regulation S-K).

32


 

Item 6. Exhibits.

 

Exhibit

Number

Description

Form

File. No

Exhibit

Filing Date

Filed/Furnished Herewith

3.1

Amended and Restated Certificate of Incorporation of the Company

8-K

001-40542

3.2

06/01/2022

 

3.2

 

Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company

8-K

001-40542

3.1

06/01/2023

 

3.3

 

Amended and Restated Bylaws of the Company

8-K

001-40542

3.2

07/02/2021

 

10.1

 

Amendment No. 5 to the First Lien Term Loan Agreement, dated March 27, 2024, by and among Mister Car Wash Holdings, Inc. and the parties thereto named therein.

8-K

001-40542

10.1

04/01/2024

 

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

*

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

*

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

**

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

**

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

 

 

 

 

*

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

 

*

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

 

*

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

 

*

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

 

*

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

 

*

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

*

 

 

 

 

 

 

 

 

 

* Filed herewith.

** Furnished herewith.

+ Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

^ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

33


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Mister Car Wash, Inc.

Date: May 3, 2024

By:

/s/ John Lai

John Lai

Chairperson, President and Chief Executive Officer

(Principal Executive Officer)

 

Date: May 3, 2024

By:

/s/ Jedidiah Gold

Jedidiah Gold

Chief Financial Officer

(Principal Financial Officer)

 

34