Mister Car Wash, Inc.

Good afternoon and welcome to Mr. Car Wash's conference call to discuss financial results for the third quarter fiscal 2021. At this time, all participants are in a listening mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please note that this call is being recorded and the reproduction of this call in whole or in part is not permitted without written authorization from the company. I would now like to turn the conference call over to Megan Everett, Senior Director of Communications. Please go ahead, ma'am.

Thank you. Good afternoon, everyone, and thank you for joining us today for Mr. Carwash's third quarter fiscal 2021 earnings call. Speaking from management today on the call are John Lai, Chairperson and Chief Executive Officer, and Jed Gold, Chief Financial Officer. After John and Jed have made their formal remarks, we will open the call to questions. Before we begin, I do need to remind everyone the comments made today may include forward-looking statements which are subject to significant risks and uncertainties that could cause the company's actual results to differ material from management's current expectations. These statements speak as of today and except as may be required by law, the company does not have any obligation to update or revise such statements if circumstances change. Please review the cautionary statements and risk factors contained in the company's second quarter 10Q, as such factors may be updated from time to time in its other filings with the SEC. During the call today, we will also refer to certain non-GAAP financial measures. A reconciliation between the GAAP and non-GAAP financial measures can be found in the company's earnings press release issued earlier today and which is posted to the investor relations section of Mr. Carwash's website at ir.mrcarwash.com. With that, I'll turn the call over to John.

Thanks, Megan. Good afternoon and thank you for joining us for our third quarter earnings call. I'd like to begin by briefly recapping our third quarter results and then discuss our strategic growth initiatives that will help drive long-term shareholder value. Jed Gold, our CFO, will then discuss our financial results and we'll conclude with a Q&A session. From both an operational and financial perspective, we are very pleased with the underlying trends in our business. As many of you know, Mr. Car Wash is the largest operator of car washes in the U.S., and we believe there's a significant opportunity to continue building our brand and growing our market share. As a result, we've been focused on expanding our footprint and investing in our people to continue scaling our company. In the third quarter, revenue increased 24.7% from the third quarter last year to $194 million. That was driven by strong comp store sales and unit growth. Adjusted EBITDA increased more than 44% from the third quarter last year to $62.5 million and reflects both increased operating efficiencies as well as investments we're making to drive long-term sustainable growth, which I'll discuss more in a moment. We opened nine new locations in the quarter, bringing our total store count to 360 as of September 30th, and we added over 30,000 new members to our unlimited watch club. and ended the quarter with over 1.5 million unique members. All of this helped us deliver another strong quarter of top and bottom line results, continuing our track record of delivering consistent growth. This consistency in the business is a testament to the operational excellence that our teams deliver day in and day out, something that we're very proud of. And I'd like to thank all of our team members who create a magical experience for our customers. Putting all the numbers aside, it's the people that have made Mr. the number one national brand in America. And together, we're building a culture and brand that is truly unique in the marketplace. In August, our senior management team had our first in-person strategic off-site since the pandemic began. And this meeting is our time to think big, go long, and not be encumbered by the day-to-day. Often, the best conversations are had around the campfire, and this meeting was no different. We started off by looking inward around our brand promise and reconfirming our commitment to continuously increasing our level of professionalism, convenience, and efficiency. In addition to fine-tuning our growth strategy, we collectively came away with a determined sense of purpose going forward. At the operations level, which is one of our strongest muscles, after over 18 months of social distancing, we brought our entire regional management team together for our first in-person national ops meeting. Over 100 of our fully vaccinated field leaders got together to discuss how to accelerate our growth while simultaneously elevating our already super high standards. Stories were shared across the company of families whose lives were forever changed as a result of us going public. It was a very uplifting feeling to be able to finally raise our glasses and recognize not only what we just did, but get geared up for what's ahead. I'm thrilled to say that coming out of the meeting, our culture, and Esprit de Corps as a mission-driven organization has never been stronger. We have a long history of developing our people and creating career opportunities for those with the drive and ambition to take on more responsibility. We're proud that over 90% of our operations teams started off as hourly employees, and they're now the ones who are developing our next generation of leaders to fulfill our vision. We recently introduced an accredited certified trainer program that turbocharges our digital learning platform called Mr. Learn. We now have 112 certified field trainers alongside our 75 regional managers and 25 regional training specialists who are providing true mentorship programs to help us accelerate our leadership pipeline and prepare for even more unit growth. Probably the biggest headline for our team coming out of the IPO was our new long-term incentive plan, which gives a piece of the pie to over 800 all of our general managers by awarding them meaningful restricted stock units. For the first time in our company's history, every single one of our 350 store managers are now owners in the company. They have been and always will be the most important position in our company, and we're thrilled to be able to finally reward them in a way that sets them up for a lifelong career at Mr. Car Wash and true financial independence. And we didn't just stop with our GMs. We also want to recognize some of our amazing frontline team members who've been with us for more than 15 years, some even 20 years, who in a lot of ways are the heart and soul of our company. We awarded over 200 RSU grants, and the tears of joy that spread throughout the ranks was a tangible and meaningful symbol of our love and appreciation for their hard work and commitment. Now let me shift to our strategic growth initiatives. The first is driving comp store growth through increasing our limited wash club member base. We operate the world's largest car wash membership program, and the predictable, recurring, subscription-based revenue has transformed every aspect of our business. We believe we can continue to grow our member base by introducing the benefits of UWC to more of our estimated seven to nine million retail customers that are coming in for a single wash. Getting retail customers to adopt our service as part of the regular purchasing pattern is the holy grail for any consumer services business. So consequently, we're working on new ways to engage, convert, and retain our members through a much more sophisticated digital ecosystem. Additionally, as we increase store density, we're enabling our members to access a larger network of stores, which increases the customer value proposition, which is emboldening us to increase our density in every market that we're in, which leads me to our second growth initiative, unit growth. We continue to see significant white space for future growth in our existing markets. The majority of our greenfield developments have materially outperformed plan and we're on pace to have the single biggest de novo year ever. We've opened 11 new stores so far this year and are on target to open 16 to 18 new greenfield locations for the year. Given the success of our greenfield program, we're aggressively building out our new store development and construction teams and have quadrupled our infrastructure in the last 12 months which will allow us to increase the number of new stores we can develop. Working alongside some of our install partners, we've also elected to build out our own vertically integrated install teams to increase our project capacity as we continue to ramp our greenfield program, with the opportunity for us to double or triple our footprint in existing markets. As we look ahead, we believe we have an opportunity to accelerate unit-level growth through strategic M&A, acquisition opportunities, and greenfield development in existing markets. That leads me to our third growth initiative, the training and development of our people. As I've shared before, our people are our biggest competitive advantage, and human capital is one of the most important factors to growing Mr. Our commitment to being the best-in-class employer began years ago, and over time, we've developed what we believe is the most comprehensive and competitive pay and benefits package in the industry. We've also been focused on raising the bar and bringing in the best talent across the company. With current unemployment levels at a 19-month low, today's labor market is extremely competitive. While our express car wash model, which represents the majority of our portfolio, is relatively low labor, we're working harder than ever to retain and attract the best talent. To get ahead of the curve in August, we began increasing our starting hourly wages while also increasing wages for our existing top performers to make sure that we don't lose them. In the face of higher wages, we've also been focused on improving productivity, and I'm happy to report that the number of cars in the process on a per-employee basis is up 51 percent, with cost per car down 21 percent and total number of labor hours used per location down 29 percent compared to Q3 of 2019. I'd like to take this opportunity to thank every single one of our site managers who've done a terrific job of improving productivity, elevating the customer experience, and most importantly, caring for their teams. Finally, I'm happy to welcome two new directors to our board, Veronica Rogers, Senior Vice President, Head of Global Sales and Business Operations at Sony, and Ron Kirk, former Mayor of Dallas and member of the Obama Cabinet. The diversity of our board demonstrates our commitment to creating a company and culture that is inclusive and brings to the table voices that have depth and breadth of experience that will ultimately make us a stronger and better organization. In summary, it was a strong third quarter, and I'm proud of the operational and financial performance our teams delivered. We're very optimistic about how we're going to finish 2021 and are even more optimistic about 2022. I'd like to now turn it over to Jed. Jed?