10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


☐	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.

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 October 30, 2024, the registrant had 322,249,966 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)
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Stockholders' Equity	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

Signatures		32

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,” or “should,” 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, 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, 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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Mister Car Wash, Inc.

Consolidated Balance Sheets

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

(Unaudited)


	As of
(Amounts in thousands, except share and per share data)	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	16,478	$	19,047
Accounts receivable, net		2,835		6,304
Other receivables		15,422		14,714
Inventory, net		5,491		8,952
Prepaid expenses and other current assets		12,559		11,877
Total current assets		52,785		60,894

Property and equipment, net		870,903		725,121
Operating lease right of use assets, net		857,861		833,547
Other intangible assets, net		113,139		117,667
Goodwill		1,134,734		1,134,734
Other assets		16,450		9,573
Total assets	$	3,045,872	$	2,881,536

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	44,715	$	33,641
Accrued payroll and related expenses		30,265		19,771
Other accrued expenses		26,793		38,738
Current maturities of long-term debt		9,250		–
Current maturities of operating lease liability		47,195		43,979
Current maturities of finance lease liability		811		746
Deferred revenue		34,639		32,686
Total current liabilities		193,668		169,561

Long-term portion of debt, net		931,046		897,424
Operating lease liability		826,213		809,409
Financing lease liability		13,473		14,033
Deferred tax liability		97,499		71,657
Other long-term liabilities		4,570		4,417
Total liabilities		2,066,469		1,966,501

Stockholders’ equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 322,239,140 and 315,192,401 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		3,228		3,157
Additional paid-in capital		820,498		817,271
Retained earnings		155,677		94,607
Total stockholders’ equity		979,403		915,035
Total liabilities and stockholders’ equity	$	3,045,872	$	2,881,536

See accompanying notes to consolidated financial statements.

Mister Car Wash, Inc.

Consolidated Statements of Operations

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

(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024			2023		2024			2023
Net revenues	$	249,329		$	234,076	$	743,555		$	696,930
Cost of labor and chemicals		73,617			72,760		217,966			210,376
Other store operating expenses		102,607			90,514		298,953			270,317
General and administrative		25,436			26,426		80,058			78,438
(Gain) loss on sale of assets, net		(1,916	)		1,321		(552	)		(3,470	)
Total costs and expenses		199,744			191,021		596,425			555,661
Operating income		49,585			43,055		147,130			141,269

Other (income) expense:
Interest expense, net		20,653			19,100		60,931			55,143
Loss on extinguishment of debt		-			-		1,882			-
Other income		-			-		(5,189	)		-
Total other expense, net		20,653			19,100		57,624			55,143
Income before taxes		28,932			23,955		89,506			86,126
Income tax provision		6,590			4,470		28,436			18,373
Net income	$	22,342		$	19,485	$	61,070		$	67,753

Earnings per share:
Basic	$	0.07		$	0.06	$	0.19		$	0.22
Diluted	$	0.07		$	0.06	$	0.19		$	0.21
Weighted-average common shares outstanding:
Basic		321,917,525			312,883,586		319,067,596			309,850,600
Diluted		329,299,326			328,844,569		329,222,641			328,265,878

See accompanying notes to consolidated financial statements.

Mister Car Wash, Inc.

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net income	$	61,070		$	67,753
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		61,038			51,418
Stock-based compensation expense		18,843			17,643
Gain on sale of assets, net		(552	)		(3,470	)
Loss on extinguishment of debt		1,882			-
Amortization of debt issuance costs		961			1,270
Non-cash lease expense		36,557			33,337
Deferred income tax		25,842			14,748
Changes in assets and liabilities:
Accounts receivable, net		3,469			(1,874	)
Other receivables		(7,012	)		212
Inventory, net		3,461			88
Prepaid expenses and other current assets		(605	)		(408	)
Accounts payable		11,629			3,777
Accrued expenses		11,850			8,170
Deferred revenue		1,954			3,288
Operating lease liability		(31,811	)		(29,689	)
Other noncurrent assets and liabilities		264			(777	)
Net cash provided by operating activities		198,840			165,486

Cash flows from investing activities:
Purchases of property and equipment		(259,896	)		(218,692	)
Acquisition of car wash operations, net of cash acquired		-			(51,890	)
Proceeds from sale of property and equipment		36,431			96,930
Net cash used in investing activities		(223,465	)		(173,652	)

Cash flows from financing activities:
Proceeds from issuance of common stock under employee plans		3,742			6,176
Payments of tax withholding on option exercises		(19,290	)		-
Proceeds from debt borrowings		925,000			-
Proceeds from revolving line of credit		186,000			-
Payments on debt borrowings		(903,513	)		-
Payments on revolving line of credit		(164,000	)		-
Payments of deferred financing costs		(5,257	)		-
Principal payments on finance lease obligations		(552	)		(492	)
Other financing activities		-			(500	)
Net cash provided by financing activities		22,130			5,184

Net change in cash and cash equivalents and restricted cash during period		(2,495	)		(2,982	)
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	$	16,624		$	62,240

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents		16,478			62,133
Restricted cash, included in prepaid expenses and other current assets		146			107
Total cash, cash equivalents, and restricted cash	$	16,624		$	62,240

Supplemental disclosure of cash flow information:
Cash paid for interest	$	60,436		$	56,164
Cash paid for income taxes	$	2,267		$	2,409

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment in accounts payable	$	17,352		$	15,167
Property and equipment in other accrued expenses	$	-		$	16,439
Stock option exercise proceeds in other receivables	$	1		$	17

See accompanying notes to consolidated financial statements.

Mister Car Wash, Inc.

Consolidated Statements of Stockholders’ Equity

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

(Unaudited)

Nine Months Ended September 30, 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
Tax withholding on option exercises		(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
Stock-based compensation expense		-			-			5,906			-		5,906
Issuance of common stock under employee plans		232,136			2			1,411			-		1,413
Vesting of restricted stock units		1,114,106			11			(11	)		-		-
Exercise of stock options		3,599,539			36			625			-		661
Tax withholding on option exercises		(1,385,675	)		(13	)		(9,382	)		-		(9,395	)
Net income		-			-			-			22,091		22,091
Balance as of June 30, 2024		321,395,188		$	3,220		$	812,845		$	133,335	$	949,400
Stock-based compensation expense		-			-			6,691			-		6,691
Exercise of stock options		843,952			8			962			-		970
Net income		-			-			-			22,342		22,342
Balance as of September 30, 2024		322,239,140		$	3,228		$	820,498		$	155,677	$	979,403

Nine Months Ended September 30, 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
Stock-based compensation expense		-		-		5,993			-		5,993
Issuance of common stock under employee plans		207,042		2		1,591			-		1,593
Vesting of restricted stock units		634,069		6		(6	)		-		-
Exercise of stock options		2,815,372		28		1,879			-		1,907
Net income		-		-		-			27,132		27,132
Balance as of June 30, 2023		311,758,330	$	3,123	$	799,498		$	62,745	$	865,366
Stock-based compensation expense		-		-		6,289			-		6,289
Exercise of stock options		2,212,411		22		1,555			-		1,577
Net income		-		-		-			19,485		19,485
Balance as of September 30, 2023		313,970,741	$	3,145	$	807,342		$	82,230	$	892,717

See accompanying notes to consolidated financial statements.

Mister Car Wash, Inc.

Notes to 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, “we,” “us,” “our” or 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 September 30, 2024, we operated 501 car washes in 21 states.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 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 omitted pursuant to such rules and regulations. These 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 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 consolidated financial statements contain all adjustments which are necessary for a fair presentation of our consolidated financial position as of September 30, 2024, consolidated results of operations for the three and nine months ended September 30, 2024 and 2023, and consolidated cash flows for the nine months ended September 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The consolidated results of operations for the three and nine months ended September 30, 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 consolidated financial statements include the accounts of the Company. All material intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Within the consolidated financial statements certain immaterial amounts have been reclassified to conform with current period presentation. We reclassified Restricted cash of $146 and $72 from an individual line item on the consolidated balance sheets at September 30, 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 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.

Accounts Receivable, Net

Accounts receivable are presented net of an allowance for doubtful accounts of $95 and $68 as of September 30, 2024 and December 31, 2023, respectively. The activity in the allowance for doubtful accounts was immaterial for the three and nine months ended September 30, 2024 and 2023.

Other Receivables

Other receivables consisted of the following for the periods presented:


	As of
	September 30, 2024		December 31, 2023
Construction receivable	$	7,660	$	6,480
Income tax receivable		1,046		3,051
Insurance receivable		3,634		3,686
Other		3,082		1,497
Total other receivables	$	15,422	$	14,714

Inventory, Net

Inventory consisted of the following for the periods presented:


	As of
	September 30, 2024			December 31, 2023
Chemical washing solutions	$	5,607		$	9,135
Reserve for obsolescence		(116	)		(183	)
Total inventory, net	$	5,491		$	8,952

The activity in the reserve for obsolescence was immaterial for the three and nine months ended September 30, 2024 and 2023.

Revenue Recognition

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Recognized over time	$	184,725	$	167,670	$	545,066	$	489,294
Recognized at a point in time		64,441		66,320		198,148		207,319
Other revenue		163		86		341		317
Net revenues	$	249,329	$	234,076	$	743,555	$	696,930

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings 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 earnings per share if their effect is antidilutive. Reconciliations of the numerators and denominators of the basic and diluted earnings per share calculations for the periods presented are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net income	$	22,342	$	19,485	$	61,070	$	67,753

Denominator:
Weighted-average common shares outstanding - basic		321,917,525		312,883,586		319,067,596		309,850,600
Effect of potentially dilutive securities:
Stock options		5,562,479		15,573,984		8,585,621		17,912,009
Restricted stock units		1,763,531		289,840		1,540,123		463,687
Employee stock purchase plan		55,791		97,159		29,301		39,582
Weighted-average common shares outstanding - diluted		329,299,326		328,844,569		329,222,641		328,265,878

Earnings per share - basic	$	0.07	$	0.06	$	0.19	$	0.22
Earnings per share - diluted	$	0.07	$	0.06	$	0.19	$	0.21

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Stock options		5,209,783		3,798,034		4,343,090		3,343,733
Restricted stock units		-		8,049		445,641		199,888
Employee stock purchase plan		-		-		32,905		30,594

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, we determined that we qualify for $5,189 in relief for the period from March 13, 2020 to December 31, 2020. Upon receipt of the credit, we will owe $526 in tax advisory costs associated with the assessment of the tax credit. This amount was expensed within General and administrative expenses in the amount of $0 and $526 during the three and nine months ended September 30, 2024, respectively. 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 credit in the amount of $0 and $5,189 in Other income on our consolidated statements of operations during the three and nine months ended September 30, 2024, respectively. A corresponding accrual of the tax credit receivable was recorded under Other assets on our consolidated balance sheet as of September 30, 2024.

Recent Accounting Pronouncements

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 periods presented. The adoption of this ASU is not expected to have a material impact on 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. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements.

3. Property and Equipment, Net

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


	As of
	September 30, 2024			December 31, 2023
Land	$	140,461		$	121,960
Buildings and improvements		341,545			263,468
Finance leases		16,661			16,604
Leasehold improvements		147,506			135,861
Vehicles and equipment		324,735			285,127
Furniture, fixtures and equipment		102,595			100,457
Construction in progress		110,411			75,639
Property and equipment, gross		1,183,914			999,116
Less: accumulated depreciation		(308,966	)		(270,706	)
Less: accumulated amortization - finance leases		(4,045	)		(3,289	)
Property and equipment, net	$	870,903		$	725,121

For the three months ended September 30, 2024 and 2023, depreciation expense was $19,682 and $15,633, respectively. For the nine months ended September 30, 2024 and 2023, depreciation expense was $55,754 and $45,567, respectively.

For the three months ended September 30, 2024 and 2023, amortization expense on finance leases was $254 and $251, respectively. For the nine months ended September 30, 2024 and 2023, amortization expense on finance leases was $756 and $753, respectively.

4. Other Intangible Assets, Net

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


	September 30, 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		42,900		42,900		40,040
Customer relationships		9,700		6,745		9,700		6,430
Covenants not to compete		13,230		10,046		13,230		8,693
Other intangible assets, net	$	172,830	$	59,691	$	172,830	$	55,163

For the three months ended September 30, 2024 and 2023, amortization expense associated with our finite-lived intangible assets was $1,246 and $1,715, respectively. For the nine months ended September 30, 2024 and 2023, amortization expense associated with our finite-lived intangible assets was $4,528 and $5,098, respectively.

As of September 30, 2024, estimated future amortization expense was as follows:


Fiscal Year Ending:
2024 (remaining three months)	$	475
2025		1,827
2026		1,585
2027		741
2028		501
Thereafter		1,010
Total estimated future amortization expense	$	6,139

5. Goodwill

Goodwill consisted of the following for the periods presented:


	As of
	September 30, 2024		December 31, 2023
Balance at beginning of period	$	1,134,734	$	1,109,815
Current period acquisitions		-