Business Wire | Nov 11, 2021 04:05PM EST

Mister Car Wash Announces Third Quarter Fiscal 2021 Financial Results

Nov. 11, 2021

TUCSON, Ariz.--(BUSINESS WIRE)--Nov. 11, 2021--Mister Car Wash, Inc. (the "Company") (NYSE: MCW), the nation's largest car wash brand, today announced its financial results for the quarter ended September 30, 2021.

"Our third quarter results reflect continued strong top and bottom line performance fueled by our growing, Unlimited Wash Club(r) ("UWC") subscription program and increased operational efficiencies, even as we invest to drive sustainable long-term growth," stated John Lai, Chairperson and CEO of Mister Car Wash. "As we look ahead, we see significant growth runway to continue to expand our footprint and grow our UWC program. We will remain focused on our commitment to our culture and operational excellence as we service our customers with professionalism, convenience and efficiency."

Highlights for the Third Quarter 2021

* Net revenues increased 24.7% to $194.3 million for the third quarter of 2021 from $155.8 million in third quarter of 2020 and increased 19.7% from the third quarter of 2019. Excluding $6.8 million of oil change revenue that was included in net revenues in the third quarter of 2020 and generated from the Company's quick lube facilities that were divested in December 2020, net revenues increased 30%. * Comparable stores sales increased 21.3% for the third quarter of 2021 compared to the third quarter of 2020. Compounded two-year comparable stores sales* increased 14.5% from the third quarter of 2019. * As of September 30, 2021, the Company had 1.564 million UWC members, which represented a 31.5% increase over the prior year period. UWC sales represented approximately 66% of total washes in the third quarter of 2021 compared to 62% in the third quarter of 2020. * The Company opened 9 new car wash locations in the third quarter of 2021 and operated a total of 360 car wash locations as of September 30, 2021, compared to 338 locations as of September 30, 2020, an increase of 6.5%. * Net income increased 37.7% to $27.4 million in the third quarter of 2021 compared to $19.9 million in the third quarter of 2020. Net income per diluted share increased 14.3% to $0.08 from $0.07 for the same respective periods. * Adjusted net income(1) increased 204.7% to $34.8 million in the third quarter of 2021 from $11.4 million in the prior year period. Adjusted net income per share(1) increased 155.2% to $0.11 from $0.04 for the same respective periods. * Adjusted EBITDA(1) increased 43.9% to $62.5 million for the third quarter of 2021 from $43.4 million in the third quarter of 2020.

Highlights for the Nine-Months Ended September 30, 2021

* Net revenues increased 37.3% to $566.9 million from $412.9 million in the first nine months of 2020. Compared to the first nine months of 2019, net revenues increased 20.3%. * Comparable stores sales increased 38.6% for the first nine months of 2021 compared to the prior year period. Compounded two-year comparable stores sales* increased 18.1% from the nine-month period of 2019. * Net loss was $58.4 million compared to net income of $20.0 million in the first nine months of 2020. * Adjusted net income(1) increased 312.8% to $103.0 million from $25.0 million in the prior year period. * Adjusted EBITDA(1) increased 76.5% to $197.0 million from $111.6 million in the first nine months of 2020.

*Compounded two-year comparable stores sales growth is calculated as the compounded growth rate of 2021 comparable stores sales growth and 2020 comparable stores sales growth for the three- month and nine- month periods ending September 30, 2021 and September 30, 2020.

(1) See Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Non-GAAP Financial Measures disclosures included below in this press release.

Store Count

Three Months Ended Nine Months Ended September September 30, 30, 2021

2020 2021

Beginning location 327 351 342 count

Locations acquired 7 2 7

Greenfield 4 7 11 locations opened

Closures - - -

Divestitures and - - - other

Ending location 338 360 360 count

Balance Sheet and Cash Flow Highlights

* Cash and cash equivalents totaled $162.2 million and there were no borrowings under the Company's Revolving Commitment as of September 30, 2021 compared to cash and cash equivalents of $58.3 million and no borrowings as of September 30, 2020. * Net cash provided by operating activities totaled $153.3 million during the first nine months of 2021, compared to $77.9 million for the same period of fiscal 2020.

Fiscal 2021 Outlook

The Company is raising its previously provided revenue and adjusted EBITDA guidance for the fiscal year ending December 31, 2021, as follows:

2021 Outlook Current Previous

$751 to $756 ~30% growth,Revenues^?/c million or $747 million

Comparable stores sales growth % 31% to 33% 29% to 33%

GAAP net income (loss) $(45) to $(40) $(45) to $ million (30) million

Adjusted net income (loss) $125 to $130 $120 to $135 million million

Adjusted EBITDA $251 to $253 $247 to $252 million million

Adjusted net income per share, diluted $0.40 to $0.44 $0.39 to $0.44

Common shares outstanding, diluted, at 330 million 330 millionyear end

New greenfield locations 16 to 18 locations 16 to 18 locations

Capital Expenditures, net of sale $76 million $83 millionleasebacks

?Revenue, net growth % excludes the $23.8 million loss ofrevenue associated with the divestiture of our quick lube facilities in December 2020.

Conference Call Details

A conference call to discuss the Company's financial results for the third quarter of fiscal 2021 and to provide a business update is scheduled for today, November 11, 2021 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-300-8521 (international callers please dial 1-412-317-6026) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at https://ir.mistercarwash.com/.

A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed online at https://ir.mistercarwash.com/ for 90 days.

About Mister Car Wash(r) | Inspiring People to Shine(r)

Headquartered in Tucson, Arizona, Mister Car Wash, Inc. (NYSE: MCW) operates 360 car washes nationwide and has the largest car wash subscription program in North America. With over 25 years of car wash experience, the Mister team is focused on operational excellence and delivering a memorable customer experience through elevated hospitality. The Mister brand is anchored in quality, friendliness and a commitment to the communities we serve as good stewards of the environment and the resources we use. We believe that when you take care of your people, they will take care of your customers. To learn more visit: https://mistercarwash.com.

Use of Non-GAAP Financial Measures

This press release includes references to non-GAAP financial measures, including Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per share and Adjusted net income (loss) per share, on a diluted basis (the "Company's Non-GAAP Financial Measures"). These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures should be read in conjunction with the Company's financial statements prepared in accordance with GAAP. The reconciliations of the Company's non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.

The Company's Non-GAAP Financial Measures are non-GAAP measures of the Company's financial 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 U.S. GAAP, and should not be construed as an inference that the Company's future results will be unaffected by unusual or nonrecurring items. Adjusted EBITDA is defined as net (loss) income before interest expense, net, income tax (benefit) expense, depreciation and amortization expense, (gain) loss on sale of assets, gain on sale of quick lube facilities, dividend recapitalization fees and payments, loss on early debt extinguishment, stock-based compensation expense, acquisition expenses, management fees, non-cash rent expense, expenses associated with the IPO, and other nonrecurring charges. Adjusted net income (loss) is defined as net income (loss) before interest expense, (gain) loss on sale of assets, dividend recapitalization fees and payments, loss on debt extinguishment, stock-based compensation expense, acquisition expenses, management fees, non-cash rent expense, expenses associated with the IPO, other nonrecurring charges and the tax impact of adjustments to net (loss) income. Adjusted net (loss) income per share is defined as basic net (loss) income per share before (gain) loss on sale of assets, gain on sale of quick lube facilities, dividend recapitalization fees and payments, loss on debt extinguishment, stock-based compensation expense, acquisition expenses, management fees, non-cash rent expense, expenses associated with the IPO, other nonrecurring charges and the tax impact of adjustments to basic net (loss) income per share. Diluted adjusted net income per share is defined as diluted net (loss) income per share before (gain) loss on sale of assets, gain on sale of quick lube facilities, dividend recapitalization fees and payments, loss on debt extinguishment, stock-based compensation expense, acquisition expenses, management fees, non-cash rent expense, expenses associated with the IPO, other nonrecurring charges and the tax impact of adjustments to basic net (loss) income per share.

The Company presents the Company's Non-GAAP Financial Measures because management believes that these measures assist investors and analysts in comparing the Company's operating performance across reporting periods on a consistent basis by excluding items that management does not believe are indicative of the Company's ongoing operating performance. Investors are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. In evaluating Company's Non-GAAP Financial Measures, investors should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in the Company's presentation of Company's Non-GAAP Financial Measures. The Company's presentation of Company's Non-GAAP Financial Measures should not be construed as an inference that the Company's future results will be unaffected by unusual or nonrecurring items. There can be no assurance that the Company will not modify the presentation of the Company's Non-GAAP Financial Measures in future periods, and any such modification may be material. In addition, the Company's Non-GAAP Financial Measures may not be comparable to similarly titled measures used by other companies in the Company's industry or across different industries.

Management believes that the Company's Non-GAAP Financial Measures are helpful in highlighting trends in the Company's 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. Management also uses 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 the Company's business strategies; to make budgeting decisions; and because the Company's credit facilities use measures similar to Adjusted EBITDA to measure the Company's compliance with certain covenants.

The Company's Non-GAAP Financial Measures have limitations as analytical tools, and investors should not consider these measures in isolation or as substitutes for analysis of the Company's results as reported under U.S. GAAP. Some of these limitations include, for example, Adjusted EBITDA does not reflect: the Company's cash expenditure or future requirements for capital expenditures or contractual commitments; the Company's cash requirements for the Company's working capital needs; the interest expense and the cash requirements necessary to service interest or principal payments on the Company's debt; cash requirements for replacement of assets that are being depreciated and amortized; and the impact of certain cash charges or cash receipts resulting from matters management does not find indicative of the Company's ongoing operations. In addition, other companies in the Company's industry may calculate similarly titled non-GAAP financial measures differently than the Company.

A reconciliation of the Company's full year guidance for Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income per share, diluted, for full year 2021 to the most directly comparable GAAP financial measures cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including acquisition expenses, other nonrecurring and the other adjustments reflected in our reconciliation of historical non-GAAP financial measures, the amounts of which, could be material.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include but are not limited to Mister Car Wash's expansion efforts and expected growth and financial results for fiscal 2021. Words including "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," or "should," or the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking.

These forward-looking statements are based on management's current expectations and beliefs. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: developments involving the Company's competitors and its industry; the Company's ability to attract new customers, retain existing customers and maintain or grow its number of subscription members; potential future impacts of the COVID-19 pandemic, including from variants thereof; the Company's ability to open and operate new locations on a timely and cost-effective manner; the Company's ability to identify suitable acquisition targets and consummate such acquisitions on attractive terms; the Company's ability to maintain and enhance its brand reputation; the Company's reliance on and relationships with third-party suppliers; risk related to the Company's indebtedness and capital requirements; risk related to governmental laws and regulations applicable to the Company and its business; the Company's ability to maintain data and information security and prevent unauthorized access to electronic and other confidential information; and the other important factors discussed under the caption "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, as such factors may be updated from time to time in its other filings with the SEC, accessible on the SEC's website at www.sec.gov and Investors Relations section of the Company's website at www.mistercarwash.com.

These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any forward-looking statement that the Company makes in this press release speaks only as of the date of such statement. Except as required by law, the Company does not have 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.

Condensed Consolidated Statements of Operations (Amounts in thousands, except share and per share amounts) (Unaudited)

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

Revenues, net $ 194,310 $ 155,796 $ 566,898 $ 412,904

Cost of labor 63,438 50,245 203,051 141,874 and chemicals

Other storeoperating 68,435 56,127 194,889 164,352 expenses

General and 22,166 10,476 226,015 37,069 administrative

Loss (gain) on 748 (4,283 ) (5,559 ) (3,773 )sale of assets

Total costs and 154,787 112,565 618,396 339,522 expenses

Operating income 39,523 43,231 (51,498 ) 73,382 (loss)



Other expense:

Interest 5,717 15,917 33,416 49,341 expense, net

Loss onextinguishment - - 3,183 1,918 of debt

Total other 5,717 15,917 36,599 51,259 expense

Income (loss) 33,806 27,314 (88,097 ) 22,123 before taxes

Income taxprovision 6,440 7,445 (29,747 ) 2,148 (benefit)

Net income $ 27,366 $ 19,869 $ (58,350 ) $ 19,975 (loss)



Othercomprehensive income (loss),net of tax:

Gain (loss) oninterest rate 54 (288 ) 401 (1,189 )swap

Totalcomprehensive $ 27,420 $ 19,581 $ (57,949 ) $ 18,786 income (loss)



Net income(loss) per share:

Basic $ 0.09 $ 0.08 $ (0.21 ) $ 0.08

Diluted $ 0.08 $ 0.07 $ (0.21 ) $ 0.07

Weighted-averagecommon shares outstanding:

Basic 296,360,660 261,863,586 274,387,532 261,784,795

Diluted 327,320,169 274,111,695 274,387,532 273,994,569

Condensed Consolidated Balance Sheets (Amounts in thousands, except share and per share amounts) (Unaudited)

As of

September December 30, 2021 31, 2020

Assets

Current assets:

Cash and cash equivalents $ 162,232 $ 114,647

Restricted cash 272 3,227

Accounts receivable, net 8,986 4,613

Inventory 5,633 6,415

Prepaid expenses and other current assets 12,879 6,068

Total current assets 190,002 134,970



Property and equipment, net 300,676 263,034

Operating lease right of use assets, net 699,274 681,538

Other intangible assets, net 124,522 127,019

Goodwill 759,770 737,415

Other assets 5,328 4,477

Total assets $ 2,079,572 $ 1,948,453



Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 26,716 $ 24,374

Accrued payroll and related expenses 19,943 11,424

Other accrued expenses 18,799 20,264

Current maturities of debt 8,400 8,400

Current maturities of operating lease liability 36,218 33,485

Current maturities of finance lease liability 542 495

Deferred revenue 26,195 24,505

Total current liabilities 136,813 122,947



Long-term portion of debt, net 601,723 1,054,820

Operating lease liability 700,548 685,479

Financing lease liability 15,507 15,917

Long-term deferred tax liability 12,571 46,082

Other long-term liabilities 4,222 6,558

Total liabilities 1,471,384 1,931,803



Commitments and contingencies (Note 15)



Stockholders' equity:

Common stock, $0.01 par value, 1,000,000,000shares authorized, 296,794,199 and 261,907,622 2,975 2,622 shares outstanding as of September 30, 2021 andDecember 31, 2020, respectively

Additional paid-in capital 740,657 91,523

Accumulated other comprehensive loss (716 ) (1,117 )

Accumulated deficit (134,728 ) (76,378 )

Total stockholders' equity 608,188 16,650

Total liabilities and stockholders' equity $ 2,079,572 $ 1,948,453

Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited)

Nine Months Ended September 30,

2021 2020

Cash flows from operating activities:

Net (loss) income $ (58,350 ) $ 19,975

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization expense 36,530 33,504

Stock-based compensation expense 210,292 1,187

(Gain) loss on disposal of property and equipment (5,559 ) (3,773 )

Loss on extinguishment of debt 3,183 1,918

Amortization of deferred financing costs 898 1,241

Non-cash lease expense 26,535 25,376

Deferred income tax (33,247 ) 10,913

Changes in assets and liabilities:

Accounts receivable (4,374 ) (331 )

Inventory 850 689

Prepaid expenses and other current assets (6,812 ) (183 )

Accounts payable 4,025 (3,707 )

Accrued expenses 6,874 11,882

Deferred revenue 1,531 1,163

Operating lease liability (26,468 ) (21,684 )

Other noncurrent assets and liabilities (2,599 ) (251 )

Net cash provided by operating activities $ 153,309 $ 77,919



Cash flows from investing activities:

Purchases of property and equipment (86,330 ) (41,504 )

Acquisition of car wash operations, net of cash (55,072 ) (21,958 )acquired

Proceeds from sale of property and equipment 50,944 12,356

Net cash used in investing activities $ (90,458 ) $ (51,106 )



Cash flows from financing activities:

Proceeds from issuance of common stock pursuant to 468,750 - initial public offering

Proceeds from exercise of stock options 121 40

Payments for repurchases of common stock (308 ) (381 )

Proceeds from secondary offering for employee tax 20,859 - withholdings

Tax withholdings paid on behalf of employees for (20,859 ) - secondary offering

Proceeds from debt borrowings - 45,625

Proceeds from revolving line of credit - 111,681

Payments on debt borrowings (456,972 ) (6,300 )

Payments on revolving line of credit - (125,681 )

Payments of debt extinguishment costs (28 ) -

Payments of deferred financing costs (226 ) -

Principal payments on finance lease obligations (364 ) (106 )

Payments of issuance costs pursuant to initial (29,194 ) - public offering

Net cash (used in) provided by financing activities $ (18,221 ) $ 24,878



Net change in cash and cash equivalents, and 44,630 51,691 restricted cash during period

Cash and cash equivalents, and restricted cash at 117,874 6,705 beginning of period

Cash and cash equivalents, and restricted cash at $ 162,504 $ 58,396 end of period



Supplemental disclosure of cash flow information:

Cash paid for interest $ 33,134 $ 34,412

Cash paid for income taxes $ 8,029 $ -



Supplemental disclosure of non-cash investing and financing activities:

Property and equipment in accounts payable $ 14,817 $ 15,588

GAAP to Non-GAAP Reconciliations (Amounts in thousands, except share and per share amounts) (Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Reconciliation of net(loss) income to Adjusted EBITDA:

Net income (loss) $ 27,366 $ 19,869 $ (58,350 ) $ 19,975

Interest expense, net 5,717 15,917 33,416 49,341

Income tax (provision) 6,440 7,445 (29,747 ) 2,148 benefit

Depreciation and 12,980 11,407 36,530 33,504 amortization expense

Loss (gain) on sale of 748 (4,283 ) (5,559 ) (3,773 )assets

Dividend recapitalization - 2 - 774 fees and payments

Loss on extinguishment of - - 3,183 1,918 debt

Stock-based compensation 6,751 402 210,292 1,187 expense

Acquisition expenses 968 551 1,977 1,565

Management fees - - 500 250

Non-cash rent expense 380 (8,293 ) 1,136 3,175

Expenses associated with 124 - 1,574 - initial public offering

Expenses associated with 498 - 498 - secondary public offering

Other 478 368 1,550 1,545

Adjusted EBITDA $ 62,450 $ 43,385 $ 197,000 $ 111,609

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Reconciliation of weighted-average common shares outstanding - diluted to Adjusted weighted-average common shares outstanding - diluted:

Weighted-average common shares outstanding - diluted

327,320,169

274,111,695

274,387,532

273,994,569

Adjustments for potentially dilutive securities

-

-

25,943,005

-

Adjusted weighted-average common shares outstanding - diluted

327,320,169

274,111,695

300,330,537

273,994,569

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

Reconciliationofweighted-averagecommon sharesoutstanding -diluted to Adjustedweighted-averagecommon sharesoutstanding -diluted:

Weighted-averagecommon shares 327,320,169 274,111,695 274,387,532 273,994,569 outstanding -diluted

Adjustments forpotentially - - 25,943,005 - dilutivesecurities

Adjustedweighted-averagecommon shares 327,320,169 274,111,695 300,330,537 273,994,569 outstanding -diluted

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Reconciliation of net income (loss) to Adjusted Net Income:

Net income (loss)

$

27,366

$

19,869

$

(58,350

)

$

19,975

Loss (gain) on sale of assets

748

(4,283

)

(5,559

)

(3,773

)

Dividend recapitalization fees and payments

-

2

-

774

Loss on extinguishment of debt

-

-

3,183

1,918

Stock-based compensation expense

6,751

402

210,292

1,187

Acquisition expenses

968

551

1,977

1,565

Management fees

-

-

500

250

Non-cash rent expense

380

(8,293

)

1,136

3,175

Expenses associated with initial public offering

124

-

1,574

-

Expenses associated with secondary public offering

498

-

498

-

Other

478

368

1,550

1,545

Tax impact of adjustments to net income (loss)

(2,487

)

2,814

(53,788

)

(1,660

)

Adjusted Net Income

$

34,826

$

11,430

$

103,013

$

24,956

Diluted Adjusted Net Income per Share

$

0.11

$

0.04

$

0.34

$

0.09

Adjusted weighted-average common shares outstanding - diluted

327,320,169

274,111,695

300,330,537

273,994,569

View source version on businesswire.com: https://www.businesswire.com/news/home/20211111006021/en/

CONTACT: Investors Farah Soi/Caitlin Churchill ICR IR@mistercarwash.com

CONTACT: Media Megan Everett media@mistercarwash.com