Mister Car Wash, Inc.

Good afternoon and welcome to Mr. Carver's second quarter 2025 conference call. At this time, all participants are in the listen-only mode. Later, we will conduct a question and answer session. An instruction will follow at that time. Please note that this is being recorded and a reproduction of this call in whole or in part is not permitted without written authorization from the company. I will now turn the call over to Eddie Plank, Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us to discuss our second quarter financial results. With me on the call today are John Lai, Chairman and Chief Executive Officer, and Jed Gold, Chief Financial Officer. After John and Jed have made their formal remarks, we'll open the call to questions. During this conference call, references to non-GAAP financial measures will be made. A complete reconciliation of these measures to the most comparable GAAP measures have been included in the company's earnings press release issued earlier today and posted to the investor relations section of the company's website at mrcarwash.com. As a reminder, comments made on today's call may include forward-looking statements, which is subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. While the company may choose to update these statements in the future, it is under no obligation to do so, unless required by applicable law or regulation. Please review the forward-looking statements disclaimer contained in the company's SEC filings, including its most recent 10-K and 10-Q reports, as such factors may be updated from time to time with the Securities and Exchange Commission. I'll now turn the call over to John.

Thanks, Eddie. Good afternoon, everyone, and thanks for joining our second quarter 2025 earnings call. The ongoing strength and durability of our UWC subscription model enabled us to deliver our ninth consecutive quarter of positive comp store sales growth. As Jed will outline in greater detail, total company revenue increased 4% to $265 million. Comparable store sales increased 1.2%, and our adjusted EBITDA came in at $87 million. While we, like the rest of the industry, experienced softer top-line trends in Q2, driven by unfavorable weather and a more tepid consumer environment, we remain heartened by our UWC member base, which remains as resilient as ever and helped offset a weaker retail backdrop. Our EBITDA performance this quarter reflects a combination of softer top-line results and our deliberate investments in repairs and maintenance. These investments, while temporarily elevating our cost base, were essential to reinforcing the long-term health of our stores and delivering the industry-leading quality that is synonymous with our brand. From a unit growth perspective, we added four new greenfield locations, which expanded our total unit count to 522 stores. In addition, We're encouraged by the continued growth of our UWC membership base, which increased approximately 5% compared to Q2 of last year. We also made significant progress on our base membership price increase, which will benefit revenue in a more pronounced way in the back half of this year. With the rollout almost complete, member retention levels are trending in line with our expectations, confirming the tremendous value that members are deriving from the program. We've pioneered how consumers care for their vehicles through innovation and consistency. We've helped shift consumer behavior, transforming car cleaning from a relatively infrequent service into part of their weekly routine. Finally, we're seeing some early wins with our efforts to stimulate retail traffic and membership signups, which I'll discuss shortly. Before I dive into the progress we're making on our strategic imperatives, I'd like to take a moment to address the changing dynamics of the car wash sector and the health of our industry. Car wash spend increased roughly 5% in Q2, according to B of A's credit card consumer spend data, illustrating that demand remains strong for our industry, albeit in a more competitive environment. Recent industry developments underscore a critical point. Not all car wash platforms are created equal. One high-profile operator underwent a significant restructuring while another platform was sold at a deep discount. These events highlight that operations matter and that customers don't see all car washes as the same. We believe we're at an inflection point in our industry's lifecycle where those that grew too quickly without the operational capability to deliver a consistent customer experience are starting to fall behind the stronger operators. As the industry rationalizes, it will ultimately be a positive for our business. Our focus on operational excellence and the fundamental building blocks we've built over multiple decades have laid a robust foundation for continued growth, stronger competitive advantage, and market share expansion across the regions we serve. When layered with our industry-leading subscription member base, strong unit economics, and innovation roadmap, We believe we're positioned exceptionally well to continue growing and building our brand for years to come. As the level of competitor new builds continues to moderate, we're seeing a return to a more rational level of greenfield expansion. The new steady state of growth for our industry will benefit MISTER because of the irrational behavior we've seen over the last five years lessens over time. It will enable us to further strengthen our core business while improving greenfield economics. all at a pace that best leverages our internal capabilities. Net-net, the height of the turbulent environment is behind us, and we're now in a period of healthy transition. Those who are operationally sound, customer-centric, and strategically focused will not only endure, but thrive. It's important to note that as one of the premier operators in our space, our customer experience and operational expertise have become some of our biggest competitive advantages and points of differentiation. We deliver this through fast, reliable service, a robust support infrastructure, unwavering quality, and what we refer to as the moment of truth, when our frontline team members interact with our customers with a wave and a smile, brightening their day while helping them keep their cars clean. With respect to all the technology, mechanization, and advanced chemistry we use, It's the human connection across our portfolio and our wow zones, which transforms what some view as an ordinary transaction into a sincere connection delivered with elevated hospitality. Now let's review the progress we've made on our four strategic pillars during the second quarter. Let me start with expanding our footprint. Each of the new locations we opened in Q2 helped to strengthen our position and provide more optionality for our UWC members, which reinforces our value proposition. As we've stated on prior calls, our opening cadence is back halfway to 2025. We're being more judicious with site selection and in a more robust competitive environment, adding more rigor to ensure we're good stewards of our invested capital. Long term, we're very optimistic about the future and our ability to increase our footprint while elevating our brand. Moving on to increasing our innovative solutions. A culture of innovation across product, service, and operations is in our DNA at MISTER. This mindset separates us from the pack and pushes the industry forward, ultimately elevates and enhances the customer experience. While I can't yet discuss details of what's in our pipeline for the future, I can assure you that following the tremendous success we've experienced with our titanium launch, we are already working on our next innovation to bring to market. and aiming to ramp up the cadence of new product and service introductions. In the meantime, we continue to see strong titanium penetration with 23% of our membership in that tier, a roughly 300 basis point increase from Q2 last year. On a smaller note, we recently introduced our towel program in our express stores, and the customer response has been positive. We approach this new customer delighter with intent, ensuring our Mr. Branded microfiber towel surpasses anything offered by our competitors. It's 150% larger than the standard offering and crafted from a premium 300 grams per square meter 80-20 cotton polyester blend. In tests, our superior towel proved to be the most effective at removing residual water from hard to reach areas such as side mirrors and SUVs. By reinforcing our commitment to quality, Our goal is to elevate customer satisfaction even further because at MISTER, a car is not clean until it's dry. Next, driving traffic and growing membership. With UWC membership anchoring our business, improving the volume and consistency of our retail business is essential to accelerating overall sales and fueling membership growth. Our regional Q2 marketing test demonstrated very promising results. In the six test markets, overall comp store sales growth outpaced the non-media test control group in a meaningful way for both retail and UWC. This early success bolsters our confidence to continue to increase our investments in marketing and ad spend. We're only just beginning to amplify our brand, but these early results speak volumes. When we share our story, customers listen and engage. I look forward to more exciting moves ahead as we look to expand reach, boost traffic, and grow our membership base. Finally, building a best-in-class team. Our people and culture are one of our greatest assets at MISTER. I'm delighted to announce that we've strengthened our senior leadership team with the addition of Michelle Krall as our new general counsel. With her decades of legal, business, and retail experience at Designer Brands, Michelle is a seasoned executive with a strong background in corporate governance, M&A, and transformation initiatives. I look forward to her partnership as we take the business to new heights. We still have important work ahead as we continue to invest in our best-in-class leadership development program and have prioritized our manager and training talent pipeline as we build our next generation of high-potential future leaders to support our growth. And in the end, our greatest asset is our people. And I'm proud to say we have the best team in the industry, but we're not done building. Looking ahead, we are confident in the longer-term opportunity for our business and our position of leadership in the industry. As the industry moves towards consolidation, our scale, infrastructure, and operating efficiency places us squarely amongst the best position to capitalize on the growth opportunities it creates via strategic M&A. Before I wrap up my prepared remarks, let me say that none of our success would be possible without our amazing dedicated team and the culture we've built at MISTER. I'd like to thank everyone for their hard work and dedication. I'll now turn the call over to Jed to provide more commentary on our financial results.