• Revenue: Increased by 9% in Q1 2025.
• Adjusted EBITDA: Grew by 14% in Q1 2025.
• Comparable Store Sales Growth: 6% in Q1 2025.
• New Store Openings: 4 new greenfield stores opened in Q1 2025.
• UWC Membership Growth: Increased by 5% year-over-year to over 2.2 million members.
• Net Income: $35 million in Q1 2025.
• Net Income Per Diluted Share: $0.11 in Q1 2025.
• Operating Expenses: Total operating expenses were $176 million, decreased 130 basis points to 67.3% of revenue.
• EBITDA Margin: Increased 130 basis points to 32.7% in Q1 2025.
• Debt Reduction: Paid down approximately $62 million of debt during Q1 2025.
• Cash and Cash Equivalents: $39 million at the end of Q1 2025.
• Outstanding Long-term Debt: $858 million, a $67 million sequential decrease.

• Warning! GuruFocus has detected 4 Warning Signs with MCW.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mister Car Wash Inc (NASDAQ:MCW) reported strong comp store sales growth of 6% and record revenues, with adjusted EBITDA increasing by 14%.
• The company opened 4 new greenfield stores in Q1 and plans to add 30 to 35 new stores in 2025, indicating a strong expansion strategy.
• UWC membership grew by 5% year-over-year, reaching over 2.2 million members, showcasing successful membership growth initiatives.
• The company successfully implemented a $3 price increase in most markets for its base OBC program, aligning with competitors and marking the first increase since inception.
• Mister Car Wash Inc (NASDAQ:MCW) voluntarily paid down approximately $62 million of debt during the quarter, improving its net leverage ratio to just under 2.5x adjusted EBITDA by year-end.

Negative Points

• Comp store trends moderated through April due to a stronger lap and the timing of Easter, creating a slight headwind to Q2 comp.
• The company faces uncertainty around the tariff environment, which could indirectly impact consumer spending and the supplier base.
• Despite strong Q1 results, the company remains cautious about the consumer environment and potential economic fallout from tariff negotiations.
• Operating expenses increased due to higher rent expenses related to new store growth and sale leasebacks, as well as higher utilities and maintenance costs.
• The company anticipates a slight uptick in churn due to the base price increase, although it expects churn levels to stabilize after a month.

Q & A Highlights

Q: Can you elaborate on the comp guidance for the next three quarters? Is the scenario of weaker consumer and tough compares factored in? A: Jedidiah Gold, CFO: We are pleased with the quarter's performance, but the environment remains challenging. We expect revenue per member growth to be in the low to mid-single digits, consistent with previous guidance. Comp store member growth is expected to be slightly positive to low single digits. We have adjusted our retail sales expectations to account for a choppy backdrop and potential tariff impacts.

Q: What is your philosophy on free cash flow, and how are you using it? A: Jedidiah Gold, CFO: We aim to maintain a roughly neutral cash flow. We have reduced the number of new builds slightly, allowing us to use excess cash flow to pay down debt. We expect a positive $25 million free cash flow for the year.

Q: Can you explain the reasons behind the 5% UWC member growth in Q1? A: John Lai, CEO: The 5% growth in UWC members was driven by a 5% increase in retail traffic. Our ability to convert retail customers into members remains strong, with capture rates steady around 10%.

Q: How are you addressing competitive pressures and the potential for an inflection point in sales? A: John Lai, CEO: Demand for express carwash services continues to grow, and while consumers have more choices, we focus on delivering exceptional customer experiences. Competitive intrusion may impact us initially, but we see customers returning over time. We are well-positioned with our superior product offering and team.

Q: How are you managing potential tariff impacts on equipment and new builds? A: John Lai, CEO: We have multiyear agreements with major suppliers that hedge against inflationary inputs. We feel confident in our position, and any potential upticks in costs, such as towels, are not expected to be material.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.