Mister Car Wash Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Policies)

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

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

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.

Accounts Receivable, Net

Accounts receivable are presented net of an allowance for doubtful accounts of $78 and $76 as of September 30, 2023 and December 31, 2022, respectively. The activity in the allowance for doubtful accounts was immaterial for the three and nine months ended September 30, 2023 and 2022.

Other Receivables

Other receivables consisted of the following for the periods presented:


	As of
	September 30, 2023		December 31, 2022
Payroll tax withholding and exercise proceeds receivable	$	31	$	273
Construction receivable		7,600		6,199
Income tax receivable		2,208		4,387
Insurance receivable		3,771		2,627
Other		1,377		1,696
Total other receivables	$	14,987	$	15,182

Inventory, Net

Inventory consisted of the following for the periods presented:


	As of
	September 30, 2023			December 31, 2022
Chemical washing solutions	$	9,410		$	9,357
Reserve for obsolescence		(188	)		(183	)
Total inventory, net	$	9,222		$	9,174

The activity in the reserve for obsolescence was immaterial for the three and nine months ended September 30, 2023 and 2022.

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,
	2023		2022		2023		2022
Recognized over time	$	167,670	$	150,873	$	489,294	$	440,809
Recognized at a point in time		66,320		66,590		207,319		220,420
Other revenue		86		113		317		925
Net revenues	$	234,076	$	217,576	$	696,930	$	662,154

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 because they would have an antidilutive effect. 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income	$	19,485	$	23,997	$	67,753	$	95,144

Denominator:
Weighted-average common shares outstanding - basic		312,883,586		304,290,590		309,850,600		302,641,749
Effect of potentially dilutive securities:
Stock options		15,573,984		22,377,790		17,912,009		24,433,580
Restricted stock units		289,840		154,987		463,687		678,005
Employee stock purchase plan		97,159		57,785		39,582		20,010
Weighted-average common shares outstanding - diluted		328,844,569		326,881,152		328,265,878		327,773,344

Net income per share - basic	$	0.06	$	0.08	$	0.22	$	0.31
Net income per share - diluted	$	0.06	$	0.07	$	0.21	$	0.29

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options		3,798,034		2,384,530		3,343,733		2,188,289
Restricted stock units		8,049		15,165		199,888		60,612
Employee stock purchase plan		-		7,186		30,594		34,466

Recently Adopted Accounting Pronouncements

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

- Definition

Disclosure of inventory accounting policy for inventory classes, including, but not limited to, basis for determining inventory amounts, methods by which amounts are added and removed from inventory classes, loss recognition on impairment of inventories, and situations in which inventories are stated above cost.

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