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United States securities and exchange commission logo
April 30, 2021
John Lai
Chief Executive Officer
Mister Car Wash, Inc.
222 E 5th Street
Tucson, Arizona 85705
Re: Mister Car Wash,
Inc.
Draft Registration
Statement on Form S-1
Submitted April 2,
2021
CIK No. 0001853513
Dear Mr. Lai:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 submitted April 2, 2021
Cover Page
1. Please amend the
disclosure on your cover page to disclose that LGP owns a significant
percentage of your
common stock, and may control all major corporate decisions. Please
also disclose the
"significant percentage" on your cover page.
Prospectus Summary
The Mister Track Record of Consistent Growth: 2010 - 2019, page 2
2. To provide investors
with context for your most recently completed fiscal year, please
amend the graphics in
this section to include data for 2020.
John Lai
Mister Car Wash, Inc.
April 30, 2021
Page 2
3. Please provide additional discussion on the information being
presented in the chart on
page 3 to provide context to the measures being presented. For
example, you note that
"[b]etween 2010 and 2019, we grew the business significantly," yet the
chart presents a
decrease in net income from 2010 to 2019.
Introducing the Car Wash Industry, page 4
4. Please amend your discussion in this section to include information
about the car wash
industry for 2020. Make conforming changes to the graphics in this
section, which
present data as of 2019. Alternatively, please tell us why you believe
it is appropriate to
discuss the industry and your market opportunity prior to and not
including the impact of
the COVID-19 pandemic.
Attractive Unit Economics Support Greenfield Expansion Strategy, page 7
5. Please explain the term "four-wall EBITDA margin" here and throughout
the filing
where the measure is presented.
Our Growth Strategies
Acquire New Customers and Grow Comparable Store Sales, page 8
6. You disclose that "[w]e have demonstrated an ability to drive
attractive organic growth
through consistent positive quarterly comparable store sales growth
performance for
nearly a decade, prior to the COVID-19 pandemic in 2020." Please amend
your
disclosure to discuss such growth during the pandemic, and clarify
whether and to what
extent you expect the COVID-19 pandemic to affect your comparable
store sales growth
moving forward.
Summary Consolidated Financial and Operating Data
Financial and Operating Data, page 14
7. Please present the most directly comparable GAAP measure with equal or
greater
prominence for Adjusted EBITDA Margin here, and throughout the filing
where the
measure is presented. Refer to Item 10(e)(1)(i)(A) of Regulation S-K
and Compliance
and Disclosure Interpretations on Non-GAAP Financial Measures,
Question 102.10.
Risk Factors, page 16
FirstName LastNameJohn Lai
8. We note that certain of your credit facilities are tied to LIBOR. Please
amend your
Comapany NameMister
disclosure Car the
to include Wash, Inc.
risks, if any, related to the discontinuation
of LIBOR, and the
effects
April 30, 2021ofPage
the same
2 on your credit facilities moving forward.
FirstName LastName
John Lai
FirstName
Mister Car LastNameJohn Lai
Wash, Inc.
Comapany
April NameMister Car Wash, Inc.
30, 2021
April 330, 2021 Page 3
Page
FirstName LastName
Risks Related to Our Business
"We may be unable to sustain or increase demand for our UWC . . .", page 16
9. You disclose that "[m]embers are able to cancel their membership at
any time and may
decide to cancel or forego memberships due to any number of reasons."
Please disclose
the cancellation rates for your UWC memberships for the periods
presented.
"We are subject to a number of risks and regulations . . .", page 18
10. Please briefly describe or cross-reference to a description of the
relevant consumer
protection laws relating to consumer credit transactions.
"We lease or sublease the land and buildings . . .", page 20
11. You disclose that "[o]ur obligations to pay rent are generally
non-cancelable, even if the
location operated at the leased or subleased location is closed," and
"if we decide to close
locations, we generally are required to continue paying rent and
operating expenses for the
balance of the lease term." Please disclose the extent of your
liability for leased locations
that are currently closed, upon which you are continuing to pay rent
and operating
expenses, if material.
"The ongoing COVID-19 pandemic has materially and adversely . . .", page 22
12. Please amend your disclosure to provide more detail about the "paid
in-kind" interest on
your Second Lien Term Loan credit agreement, including what the type
of in-kind
payment you provided.
Use of Proceeds, page 38
13. Please revise to state with more specificity the amount of proceeds to
be used for each
identified use of proceeds. If you are unable to do so, please state
that you have no
current specific plan for the proceeds, or a significant portion
thereof, and discuss the
principal reasons for the offering. In addition, with respect to the
last paragraph of this
section, please note that you may reserve the right to change the
stated uses of proceeds,
provided that such reservation is due to certain contingencies that
are discussed
specifically and the alternatives to such use in that event are
indicated; please revise
accordingly.
Selected Consolidated Financial and Other Data
Reconciliation of our net income (loss) to Adjusted EBITDA, page 44
14. Referencing note (i) for 'Other' adjustment, please tell us the amount
of each component
of this adjustment for each year presented, and present a separate
line item in the table for
any individual amounts that are material. Additionally, please tell us
the nature of each
component and how you determined that they were not normal, recurring,
cash operating
expenses necessary to operate your business. See Question 100.01 of
the Compliance and
John Lai
Mister Car Wash, Inc.
April 30, 2021
Page 4
Disclosure Interpretations on Non-GAAP Financial Measures.
15. We note the Non-GAAP adjustment to remove acquisition expenses to
arrive at Adjusted
EBITDA. We also note per page 48 that your historical growth strategy
has involved
acquiring local and regional car wash operators, and that you plan to
continue to pursue a
growth strategy that includes acquisition expenses. Based on these
disclosures, please tell
us how this adjustment complies with Item 10(e)(1)(ii) of Regulation
S-K and Question
100.01 of the Compliance and Disclosure Interpretations on Non-GAAP
Financial
Measures.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Factors Affecting Our Business and Trends, page 47
16. We note per page 2 that Interior Cleaning Locations generate strong
unit-level economics
and cash flows. Please tell us what you you mean by "strong unit-level
economics."
Additionally, we note per page 47 that suspending operations at your
Interior Cleaning
Locations improved your net income margin. Finally, we note that your
growth strategy
is only focused on expanding the number of Express Exterior Locations,
not Interior
Locations. In light of the above, please tell us your consideration of
providing a
discussion to describe the expected impact of this change in trend
pursuant to Item
303(b)(1)(i) and (2)(ii) of Regulation S-K.
Results of Operations, page 53
17. We note that the change in revenue over the reporting periods is
attributed to several
factors. Please expand your discussion of results of operations to
quantify the amount of
each underlying factor identified. Additionally, please consider
separately quantifying the
changes in revenue generated from Express Exterior Locations and
Interior Cleaning
Locations. See Item 303 of Regulation S-K.
Revenues, Net and Store Operating Costs, page 53
18. Please quantify the change in cost of labor and chemicals resulting
from the redesign of
your labor model, and the amount of the change resulting from the
shift from interior
cleaning services to express exterior cleaning services. Refer to Item
303(b)(2)(i) and (ii)
of Regulation S-K.
Business
Our Service Offering
Unlimited Wash Club, page 71
FirstName LastNameJohn Lai
19. We note your disclosure that "UWC has helped to diversify our sales by
providing a high-
Comapany NameMister
margin Car Wash,
recurring revenue Inc. Please describe the differences in
operating margin for
stream."
all 2021
April 30, of your service
Page 4 offerings.
FirstName LastName
John Lai
FirstName
Mister Car LastNameJohn Lai
Wash, Inc.
Comapany
April NameMister Car Wash, Inc.
30, 2021
April 530, 2021 Page 5
Page
FirstName LastName
Our Team Members, page 73
20. Please explain what the "Net Promoter Score" measures, how it is
calculated and why you
believe it is meaningful.
Suppliers and Distribution, page 77
21. Please describe the terms of your agreement, if any, with the industry
leader in the
transportation business, and file any agreement with this entity as an
exhibit to your
registration statement. Please also discuss the terms of the 2018
agreement with a supplier
of a comprehensive suite of hardware, software, and management
systems, and file this
agreement as an exhibit to your registration statement. See Item
601(b)(10) of Regulation
S-K.
Government Regulation, page 79
22. We note your disclosure that "[w]e are subject to various laws and
regulations, including
labor and employment laws, laws governing advertising, data privacy
laws, safety
regulations and other laws such as consumer protection regulations."
However, your
disclosure in this section appears to discuss only environmental laws
and regulations.
Please amend your disclosure to briefly describe the various other
laws and regulations
and the effect of the same on your business.
Executive Compensation
Bonus Compensation, page 89
23. Please amend your disclosure to describe how EBITDAR budget attainment
is is
calculated from your audited financial statements.
Certain Relationships and Related Party Transactions, page 98
24. Please file the stockholders agreement with LGP as an exhibit to your
registration
statement, or tell us why you do not believe you are required to do
so. See Item
601(b)(10) of Regulation S-K.
Description of Capital Stock
Conflicts of Interest, page 102
25. Please amend your filing to include risk factor disclosure describing
the risks, if any,
related to your renunciation of any interest or expectancy in certain
opportunities that are
presented to you or your officers, directors or stockholders.
Underwriting, page 116
26. We note your disclosure that "[i]n addition, affiliates of certain of
the underwriters are
lenders under our Credit Facilities and as a result, may receive a
portion from the net
proceeds from this offering." Please disclose the portion of net
proceeds that will go to
John Lai
Mister Car Wash, Inc.
April 30, 2021
Page 6
affiliates of your underwriters, and discuss any conflicts of interest
related to a portion of
your net proceeds going to these affiliates. Add risk factor disclosure
as appropriate.
Mister Car Wash, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income, page F-4
27. We note that gains and losses from the sale of assets are included in
operating income in
your statements of operations and comprehensive income for the years
ended December
31, 2020 and 2019. Please tell us your basis for classifying these
amounts as operating
income instead of non-operating income pursuant to Rule 5-03(b)(7) of
Regulation S-X.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Cost of Labor and Chemicals, page F-12
28. We note that Cost of Labor and Chemicals includes maintenance costs, and
that Other
Store Operating Expenses includes repairs and maintenance. Please tell us
how you
determine whether maintenance costs are applicable to revenue or other
operating costs
pursuant to Rule 5-03(b)(2) and (3) of Regulation S-X. Additionally,
please expand to
disclose more detail about the nature of costs included in each line
item.
You may contact Robert Shapiro at (202) 551-3273 or Theresa Brillant at
(202) 551-
3307 if you have questions regarding comments on the financial statements and
related
matters. Please contact Katherine Bagley at (202) 551-2545 or Lilyanna Peyser
at (202) 551-
3222 with any other questions.
Sincerely,
FirstName LastNameJohn Lai
Division of
Corporation Finance
Comapany NameMister Car Wash, Inc.
Office of Trade &
Services
April 30, 2021 Page 6
cc: Drew Capurro
FirstName LastName