UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40542
Mister Car Wash, Inc.
(Exact name of Registrant as specified in its Charter)
Delaware
47-1393909
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
222 E. 5th Street, Tucson, Arizona
85705
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (520) 615-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
MCW
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 23, 2025, the registrant had 327,568,371 shares of common stock, $0.01 par value per share, outstanding.
MISTER CAR WASH, INC.
TABLE OF CONTENTS
Forward-Looking Statements
2
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited):
3
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Cash Flows
4
Consolidated Balance Sheets
5
Consolidated Statements of Stockholders' Equity
6
Notes to Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
27
Item 4.
Controls and Procedures
PART II - OTHER INFORMATION
Legal Proceedings
28
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
29
Signatures
30
1
Table of Contents
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our future results of operations and financial position, business strategy and approach are forward-looking. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would” or the negative thereof or comparable terminology.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q due to various factors, including, but not limited to, those identified in Part I. Item 1A. “Risk Factors” and in Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Form 10-K”) and in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.
You are cautioned not to place undue reliance on such forward-looking statements. In addition, even if actual results are consistent with the forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q, they may not be indicative of results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake 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, after the date of this Quarterly Report on Form 10-Q.
As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “Mister Car Wash,” “Mister,” the “Company,” “we,” “us,” and “our,” refer to Mister Car Wash, Inc. and its subsidiaries on a consolidated basis.
Item 1. Financial Statements.
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
(Amounts in thousands, except share and per share data)
2025
2024
Net revenues
$
263,417
249,329
790,488
743,555
Costs and expenses
Cost of labor and chemicals
76,581
73,617
227,460
217,966
Other store operating expenses
109,531
102,607
328,048
298,953
General and administrative
22,693
25,436
72,465
80,058
(Gain) loss on sale of assets, net
2,759
(1,916
)
3,549
(552
Total costs and expenses
211,564
199,744
631,522
596,425
Operating income
51,853
49,585
158,966
147,130
Other (income) expense
Interest expense, net
14,054
20,653
45,249
60,931
Loss on extinguishment of debt
—
1,882
Other income
(21
(5,189
Total other expense, net
45,228
57,624
Income before taxes
37,799
28,932
113,738
89,506
Income tax provision
10,388
6,590
30,732
28,436
Net income
27,411
22,342
83,006
61,070
Other comprehensive income, net of tax
Gain (loss) on interest rate swap
(266
84
Total comprehensive income
27,145
83,090
Earnings per share
Basic
0.08
0.07
0.25
0.19
Diluted
Weighted-average common shares outstanding
327,389,467
321,917,525
325,728,763
319,067,596
332,359,175
329,299,326
331,899,189
329,222,641
See accompanying notes to consolidated financial statements.
(Amounts in thousands)
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization expense
65,055
61,038
Stock-based compensation expense
19,893
18,843
Amortization of deferred debt issuance costs
865
961
Non-cash lease expense
41,198
36,557
Deferred income tax
28,785
25,842
Changes in assets and liabilities
Accounts receivable, net
(1,888
3,469
Other receivables
1,372
(7,012
Inventory, net
344
3,461
Prepaid expenses and other current assets
1,509
(605
Accounts payable
7,692
11,629
Accrued expenses
7,242
11,850
Deferred revenue
2,704
1,954
Operating lease liability
(35,875
(31,811
Other noncurrent assets and liabilities
282
264
Net cash provided by operating activities
225,733
198,840
Cash flows from investing activities
Purchases of property and equipment
(178,654
(259,896
Proceeds from sale of property and equipment
6,851
36,431
Net cash used in investing activities
(171,803
(223,465
Cash flows from financing activities
Proceeds from issuance of common stock under employee plans
4,116
3,742
Payments of tax withholding on option exercises
(19,290
Proceeds from debt borrowings
925,000
Proceeds from revolving line of credit
186,000
Payments on debt borrowings
(89,307
(903,513
Payments on revolving line of credit
(164,000
Payments of deferred debt issuance costs
(5,257
Principal payments on finance lease obligations
(585
Net cash provided by (used in) financing activities
(85,776
22,130
Net change in cash and cash equivalents and restricted cash during period
(31,846
(2,495
Cash and cash equivalents and restricted cash at beginning of period
67,612
19,119
Cash and cash equivalents and restricted cash at end of period
35,766
16,624
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents
35,652
16,478
Restricted cash, included in prepaid expenses and other current assets
114
146
Total cash, cash equivalents, and restricted cash
Supplemental disclosure of cash flow information
Cash paid for interest
46,730
60,436
Cash paid for income taxes
2,296
2,267
Supplemental disclosure of non-cash investing and financing activities
Property and equipment in accounts payable
9,285
17,352
Property and equipment accrued in other accrued expenses
3,817
Stock option exercise proceeds in other receivables
As of
September 30, 2025
December 31, 2024
Assets
Current assets
67,463
2,679
791
14,451
13,518
5,384
5,728
10,598
11,590
Total current assets
68,764
99,090
Property and equipment, net
915,508
814,600
Operating lease right of use assets, net
901,631
924,896
Other intangible assets, net
111,119
112,507
Goodwill
1,134,734
Other assets
11,174
15,969
Total assets
3,142,930
3,101,796
Liabilities and stockholders’ equity
Current liabilities
36,084
30,020
Accrued payroll and related expenses
30,164
27,116
Other accrued expenses
37,626
39,162
Current maturities of long-term debt
6,920
Current maturities of operating lease liability
52,330
48,986
Current maturities of finance lease liability
857
804
36,664
33,960
Total current liabilities
193,725
186,968
Long-term debt, net
827,231
909,094
871,296
890,613
Financing lease liability
12,575
13,262
Deferred tax liabilities, net
130,554
101,741
Other long-term liabilities
2,392
1,766
Total liabilities
2,037,773
2,103,444
Stockholders’ equity
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 327,532,052 and 323,693,863 shares outstanding as of September 30, 2025 and December 31, 2024, respectively
3,281
3,242
Additional paid-in capital
853,940
830,264
Accumulated other comprehensive income
Retained earnings
247,852
164,846
Total stockholders’ equity
1,105,157
998,352
Total liabilities and stockholders’ equity
Consolidated Statements of Stockholders’ Equity
Nine Months Ended September 30, 2025
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income
Retained Earnings
Stockholders’ Equity
Shares
Amount
Balance as of December 31, 2024
323,693,863
6,843
Vesting of restricted stock units
137,425
(1
Exercise of stock options
983,150
11
1,689
1,700
27,000
Balance as of March 31, 2025
324,814,438
3,254
838,795
191,846
1,033,895
6,477
Issuance of common stock under employee plans
188,893
1,233
1,235
1,697,973
17
(17
556,243
426
431
Gain on interest rate swap
350
28,595
Balance as of June 30, 2025
327,257,547
3,278
846,914
220,441
1,070,983
6,573
274,505
453
456
Loss on interest rate swap
Balance as of September 30, 2025
327,532,052
Nine Months Ended September 30, 2024
Balance as of December 31, 2023
315,192,401
3,157
817,271
94,607
915,035
6,246
139,409
4,116,291
42
704
746
Tax withholding on option exercises
(1,613,019
(16
(9,924
(9,940
16,637
Balance as of March 31, 2024
317,835,082
3,184
814,296
111,244
928,724
5,906
232,136
1,411
1,413
1,114,106
(11
3,599,539
36
625
661
(1,385,675
(13
(9,382
(9,395
22,091
Balance as of June 30, 2024
321,395,188
3,220
812,845
133,335
949,400
6,691
843,952
8
962
970
Balance as of September 30, 2024
322,239,140
3,228
820,498
155,677
979,403
(Dollar amounts in thousands, except per share data)
1. Nature of Business
Mister Car Wash, Inc., a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” “our” or the “Company”), is based in Tucson, Arizona and is a provider of conveyorized car wash services. We primarily operate Express Exterior Locations, which offer express exterior cleaning services along with free vacuum services, and interior cleaning services at select locations. As of September 30, 2025, we operated 527 car washes in 21 states.
2. Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2024 included in the 2024 Form 10-K.
The consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal and recurring nature. The consolidated results of operations and comprehensive income for the three and nine months ended September 30, 2025 are not necessarily indicative of the consolidated results of operations and comprehensive income that may be expected for any other future interim or annual period.
The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the periods reported. Some of the significant estimates that we have made pertain to the determination of deferred tax assets and liabilities and certain assumptions used related to the evaluation of goodwill, intangibles, and property and equipment asset impairment. Actual results could differ from those estimates.
Accounts receivable are presented net of an allowance for doubtful accounts of $148 and $123 as of September 30, 2025 and December 31, 2024, respectively. The activity in the allowance for doubtful accounts was immaterial for the three and nine months ended September 30, 2025 and 2024.
Other receivables consisted of the following for the periods presented:
Payroll tax withholding and exercise proceeds receivable
834
Construction receivable
4,174
4,584
Income tax receivable
1,193
1,864
Insurance receivable
5,341
4,250
Other
3,743
1,986
Total other receivables
Prepaid expenses and other current assets consisted of the following for the periods presented:
Spare parts
3,929
4,801
Prepaid insurance
1,873
2,658
4,796
4,131
Total prepaid expenses and other current assets
Inventory consisted of the following for the periods presented:
Chemical washing solutions
5,427
5,831
67
14
Total inventory, gross
5,494
5,845
Reserve for obsolescence
(110
(117
Total inventory, net
The activity in the reserve for obsolescence was immaterial for the three and nine months ended September 30, 2025 and 2024.
The Company has a pay fixed, receive variable interest rate swap contract (“Swap”) to manage its exposure to changes in interest rates. The Swap is recognized in the consolidated balance sheets at fair value. The Swap is a cash flow hedge and is recorded using hedge accounting, as such, changes in the fair value of the Swap are recorded in other comprehensive income (loss), net of tax until the hedged item is recognized in earnings. Amounts reported in other comprehensive income, net of tax related to the Swap are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The swap is scheduled to terminate June 30, 2027.
The Company assesses, both at the inception of the hedge and on an ongoing basis, whether the derivative used as a hedging instrument is highly effective in offsetting the changes in the cash flow of the hedged item. If it is determined that the derivative is not highly effective as a hedge or ceases to be highly effective, the Company will discontinue hedge accounting prospectively. See Note 8-Fair Value Measurements and Note 9-Interest Rate Swap for additional information.
The following table summarizes the composition of our net revenues for the periods presented:
Recognized over time
203,293
184,725
595,332
545,066
Recognized at a point in time
59,692
64,441
194,293
198,148
Other revenue
432
163
863
341
Reconciliations of the numerators and denominators of the basic and diluted earnings per share calculations for the periods presented are as follows:
Numerator
Denominator
Weighted-average common shares outstanding - basic
Effect of potentially dilutive securities
Stock options
3,039,335
5,562,479
3,710,846
8,585,621
Restricted stock units
1,907,438
1,763,531
2,449,938
1,540,123
Stock purchase rights
22,935
55,791
9,642
29,301
Weighted-average common shares outstanding - diluted
Earnings per share - basic
Earnings per share - diluted
The following potentially dilutive shares were excluded from the computation of diluted earnings per share for the periods presented because including them would have been antidilutive:
6,358,906
5,209,783
5,382,773
4,343,090
469,852
445,641
26
27,538
32,905
In response to the COVID-19 pandemic, the Employee Retention Credit (“ERC”), was established under the Coronavirus Aid, Relief, and Economic Security Act. The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer paid to employees from March 13, 2020 to December 31, 2020. Companies who meet the eligibility requirements can claim the ERC on an original or adjusted employment tax return for a period within those dates.
In March 2024, we determined that we qualified for and recognized $4,663 (net of tax advisory costs) in relief for the period from March 13, 2020 to December 31, 2020. Upon receipt of the credit, we will owe an immaterial amount for tax advisory costs associated with the assessment of the tax credit. As there is no authoritative guidance under U.S. GAAP for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standards 20, or IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance of receipt of the identified ERC amount and recorded the credit in other income on our consolidated statements of operations and comprehensive income.
As of September 30, 2025 and December 31, 2024, the tax credit receivable was $2,125 and $4,663, respectively. As of September 30, 2025 and December 31, 2024, these amounts are included in other receivables and other assets, respectively, on our consolidated balance sheets.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The adoption of this ASU will be reflected in the Company's annual financial statements for the year ending December 31, 2025, and is not expected to have a material impact on our consolidated financial statements.
9
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires a PBE to disclose additional information about specific expense categories in the notes to financial statements at interim and annual periods. This information is generally not presented in the financial statements. The ASU requires that at each interim and annual period a PBE: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization; (2) include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements; (3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are still assessing the impact of this ASU.
In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This ASU is intended to improve the operability and application of guidance related to capitalized software development costs. The ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are still assessing the impact of this ASU.
3. Property and Equipment, Net
Property and equipment, net consisted of the following for the periods presented:
Land
135,538
123,550
Buildings and improvements
402,367
328,664
Finance leases
16,497
16,554
Leasehold improvements
167,269
151,635
Vehicles and equipment
372,308
353,660
Furniture, fixtures and equipment
105,538
106,271
Construction in progress
90,589
61,153
Property and equipment, gross
1,290,106
1,141,487
Accumulated depreciation
(369,667
(322,676
Accumulated amortization - finance leases
(4,931
(4,211
For the three months ended September 30, 2025 and 2024, depreciation expense was $21,700 and $19,682, respectively. For the nine months ended September 30, 2025 and 2024, depreciation expense was $62,938 and $55,754, respectively.
For the three months ended September 30, 2025 and 2024, amortization expense on finance leases was $242 and $254, respectively. For the nine months ended September 30, 2025 and 2024, amortization expense on finance leases was $729 and $756, respectively.
During the second quarter of 2025, the Company sold a car wash location that was classified as held for sale. Based on the net proceeds of the sale, a gain of $338 was recorded during the second quarter of 2025. The gain was recorded in (gain) loss on sale of assets, net on the consolidated statements of operations and comprehensive income for the nine months ended September 30, 2025.
As of September 30, 2025, the two car wash locations classified as held for sale have a net book value of $3,294. The assets of these locations are recorded in property and equipment, net on the consolidated balance sheets.
4. Other Intangible Assets, Net
Other intangibles assets, net consisted of the following as of the periods presented:
Gross Carrying Amount
Accumulated Amortization
Trade names and trademarks
107,000
Customer relationships
9,700
7,369
7,019
Covenants not to compete
6,940
5,152
13,230
10,404
123,640
12,521
129,930
17,423
10
For the three months ended September 30, 2025 and 2024, amortization expense associated with our finite-lived intangible assets was $458 and $1,246, respectively. For the nine months ended September 30, 2025 and 2024, amortization expense associated with our finite-lived intangible assets was $1,388 and $4,528, respectively.
As of September 30, 2025, estimated future amortization expense was as follows:
Fiscal Year Ending:
2025 (remaining three months)
439
2026
1,585
2027
758
2028
433
2029
310
Thereafter
594
Total estimated future amortization expense
4,119
5. Other Accrued Expenses
Other accrued expenses consisted of the following for the periods presented:
Utilities
7,192
6,685
Accrued tax expense
14,947
11,485
Insurance expense
6,532
4,843
Greenfield development accruals
9,653
5,138
6,496
Total other accrued expenses
Accrued tax expense is comprised of federal, state, and local taxes payable for property, income, sales, use, and personal property.
Greenfield development accruals represent an obligation to pay for invoices not yet received, primarily related to land and buildings and improvements, on properties which we have taken control of as of September 30, 2025 and December 31, 2024.
6. Income Taxes
The effective income tax rates on continuing operations for the nine months ended September 30, 2025 and 2024 were 27.0% and 31.8%, respectively. In general, the effective tax rates differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible expenses such as those related to certain executive compensation, and discrete tax expenses related to stock option exercises during the period.
The year-to-date provision for income taxes for the nine months ended September 30, 2025 included taxes on earnings at an anticipated annual effective tax rate of 25.5% and a net, unfavorable tax impact of $1,782 related primarily to discrete tax expense originating from stock options exercised during the nine months ended September 30, 2025.
The year-to-date provision for income taxes for the nine months ended September 30, 2024 included taxes on earnings at an anticipated annual effective tax rate of 25.5% and a net, unfavorable tax impact of $5,652 related primarily to discrete tax expense originating from stock options exercised during the nine months ended September 30, 2024.
On July 4, 2025, the "One Big Beautiful Bill Act” (the "OBBBA") was signed into law. The OBBBA includes tax reform provisions including 100% bonus depreciation, full expensing of domestic research expenditures, and modifications to interest expense limitations. After initial evaluation, the Company does not currently expect these laws to have a material effect on tax expense or the anticipated annual effective tax rate. We expect certain provisions effective for the 2025 tax year will decrease current and future cash taxes paid on the consolidated financial statements.
For the nine months ended September 30, 2025 and 2024, we recorded $62 and $406, respectively, related to unrecognized tax benefits or interest and penalties related to any uncertain tax positions.
7. Debt
Long-term debt consisted of the following as of the periods presented:
Maturity
Stated Interest Rate
Effective Interest Rate
Credit agreement
First lien term loan
March 27, 2031
6.66%
6.93%
831,074
920,381
Unamortized discount and debt issuance costs
(3,843
(4,367
Current maturities of debt
(6,920
Total long-term portion of debt, net
As of September 30, 2025, there are no payments required until the maturity date.
As of September 30, 2025 and December 31, 2024, total unamortized discount and debt issuance costs were $5,438 and $6,304, respectively, and accumulated amortization of debt issuance costs was $1,742 and $4,018, respectively.
For the three months ended September 30, 2025 and 2024, the amortization of debt issuance costs in interest expense, net in the consolidated statements of operations and comprehensive income was approximately $292 and $248, respectively.
For the nine months ended September 30, 2025 and 2024, the amortization of debt issuance costs in interest expense, net in the consolidated statements of operations and comprehensive income was approximately $865 and $961, respectively.
On August 21, 2014, we entered into a Credit Agreement (“Credit Agreement”) which was originally comprised of a term loan (“First Lien Term Loan”) and a revolving commitment (“Revolving Commitment”), which was subsequently amended and restated. The Credit Agreement was collateralized by substantially all personal property (including cash, inventory, property and equipment, and intangible assets), real property, and equity interests owned by us.
In March 2024, we entered into Amendment No. 5 to the Credit Agreement with the lenders party thereto, and Bank of America, N.A. (“BofA”) as the successor administrative agent and collateral agent. This amendment further modified the Credit Agreement by providing $925,000 in first lien term commitments, consisting of $901,201 to refinance outstanding term loans and $23,799 in additional incremental term commitments (collectively, the “2024 Term Loans”). Starting September 30, 2024, the loans will be amortized in equal quarterly installments at an annual rate of 1.00% of the original principal amount. In connection with Amendment No. 5, we expensed $1,882 of previously unamortized debt issuance costs as a loss on extinguishment of debt in the consolidated statements of operations and comprehensive income.
In November 2024, we entered into Amendment No. 6 to the Credit Agreement with the lenders party thereto, and BofA as the successor administrative agent and collateral agent. This amendment further modified the Credit Agreement by resetting the soft call protection of 1% for voluntary prepayments of the Term Loans to last for six months after the effective date of this Amendment, as well as repricing the Term and Revolving Loans margins, where each was reduced by 0.25%. In connection with Amendment No. 6, we expensed $94 of previously unamortized debt issuance costs as a loss on extinguishment of debt in the consolidated statements of operations and comprehensive income.
Amendment No. 5 to our Credit Agreement also increased our borrowing capacity under the Revolving Commitment from $150,000 to $300,000. Any unused commitment fee is also payable based on the First Lien Net Leverage Ratio. The Credit Agreement requires a Rent Adjusted Total Net Leverage Ratio no greater than 6.50 to 1.00, tested quarterly beginning with the quarter ending September 30, 2024, for the benefit of lenders holding the Revolving Commitment.
The maximum available borrowing capacity under the Revolving Commitment is reduced by outstanding letters of credit under the Revolving Commitment. As of September 30, 2025 and December 31, 2024, the available borrowing capacity under the Revolving Commitment was $299,926 and $299,791, respectively.
In addition, an unused commitment fee based on our First Lien Net Leverage Ratio is payable on the average of the unused borrowing capacity under the Revolving Commitment. As of September 30, 2025 and December 31, 2024, the unused commitment fee was 0.20% and 0.25%, respectively.
As of September 30, 2025, we have a letter of credit sublimit of $90,000 under the Revolving Commitment, provided that the total utilization of revolving commitments under the Revolving Commitment does not exceed $300,000. Any letter of credit issued under the Credit Agreement has an expiration date which is the earlier of (i) no later than 12 months from the date of issuance or (ii) five
12
business days prior to the maturity date of the Revolving Commitment, as amended under Amendment No. 2 to the Credit Agreement. Letters of credit under the Revolving Commitments reduce the maximum available borrowing capacity under the Revolving Commitment. As of September 30, 2025 and December 31, 2024, the amounts associated with outstanding letters of credit were $74 and $209, respectively.
As of September 30, 2025, we were in compliance with all covenants related to our long-term debt.
8. Fair Value Measurements
The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of September 30, 2025:
Fair Value Measurements
Total
Level 1
Level 2
Level 3
Deferred compensation plan
7,387
Interest rate swap
112
Liabilities
4,551
Contingent consideration
4,328
The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2024:
6,487
4,425
We measure the fair value of our financial assets and liabilities using the highest level of inputs that are available as of the measurement date. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair value due to the immediate or short-term maturity of these financial instruments. See Note 9 Interest Rate Swap for additional information on the interest rate swap.
As of September 30, 2025, and December 31, 2024, we did not hold any cash investments.
We maintain a deferred compensation plan for a certain group of our highly compensated employees, in which certain of our executive officers participate in. The plan allows eligible participants to defer up to 90% of their base salary and/or incentive plan compensation as well as any refunds from our 401(k) Plan. Participants may elect investment funds selected by the Company in whole percentages. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds. These investment funds consist primarily of equity securities, such as common stock and mutual funds, and fixed income securities and are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. These investment options do not represent actual ownership of or ownership rights in the applicable funds; they serve the purpose of valuing the account and the corresponding obligation of the Company.
As of September 30, 2025 and December 31, 2024, the fair value of our First Lien Term Loan approximated its carrying value due to the debt’s variable interest rate terms.
We recognized a Level 3 contingent consideration liability in connection with the Downtowner Car Wash acquisition in December 2021. We measured its contingent consideration liability using Level 3 unobservable inputs. The contingent consideration liability is associated with the achievement of certain targets and is estimated at each balance sheet date by considering among other factors, results of completed periods and our most recent financial projection for future periods subject to earn-out payments. There are two components to the contingent consideration: a payment when we obtained the certificate of occupancy for the car wash and opened it to the public in 2023 and an annual payment based on certain financial metrics of the acquired business. A change in the forecasted revenue or projected opening dates could result in a significantly lower or higher fair value measurement. We determined that there were no significant changes to the unobservable inputs that would have resulted in a change in fair value of this contingent consideration liability at September 30, 2025. No payments were made during the three and nine months ended September 30, 2025 and 2024.
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During the three and nine months ended September 30, 2025 and 2024, there were no transfers between fair value measurement levels.
9. Interest Rate Swap
On April 28, 2025, the Company executed a pay-fixed, receive-floating interest rate swap (the “Swap”) to mitigate variability in forecasted interest payments on an aggregate notional amount of $250,000 of the Company’s variable-rate First Lien Term Loan. The Swap has an effective date of June 30, 2025, with a maturity date of June 30, 2027. The Company designated the Swap as a cash flow hedge.
As of September 30, 2025, information pertaining to the Swap is as follows:
Notional Amount
Fair Value
Pay-Fixed
Receive-Floating
Maturity Date
250,000
3.369%
4.163%
June 30, 2027
As of September 30, 2025 and December 31, 2024, the current portion of the fair value of the Swap was $550 and $0, respectively, and is included in prepaid and other current assets in the accompanying consolidated balance sheets.
As of September 30, 2025 and December 31, 2024, the long-term portion of the fair value of the Swap was $438 and $0, respectively, and is included in other long-term liabilities in the accompanying consolidated balance sheets.
For the three months ended September 30, 2025 and 2024, amounts reported in other comprehensive income in the accompanying consolidated statements of operations and comprehensive income are net of tax of $88 and $0, respectively.
For the nine months ended September 30, 2025 and 2024, amounts reported in other comprehensive income in the accompanying consolidated statements of operations and comprehensive income are net of tax of $28 and $0, respectively.
10. Leases
Balance sheet information related to leases consisted of the following for the periods presented:
Classification
Operating
Operating right of use assets, net
Finance
11,566
12,344
Total lease assets
913,197
937,240
Current
Long-term
Total lease liabilities
937,058
953,665
Components of total lease cost, net, consisted of the following for the periods presented:
Operating lease expense(a)
30,886
28,126
92,373
82,997
Finance lease expense
Amortization of lease assets
242
254
729
756
Interest on lease liabilities
258
737
782
Short-term lease expense
22
52
61
155
Variable lease expense(b)
2,999
3,548
13,908
13,568
Total lease expense
34,391
32,238
107,808
98,258
The following includes supplemental information for the periods presented:
Operating cash flows from operating leases
29,901
27,091
89,330
80,451
Operating cash flows from finance leases
Financing cash flows from finance leases
198
190
585
552
Operating lease ROU assets obtained in exchange for lease liabilities
10,364
25,821
17,959
60,768
Finance lease ROU assets obtained in exchange for lease liabilities
57
Weighted-average remaining operating lease term
13.40
13.63
Weighted-average remaining finance lease term
14.28
14.96
Weighted-average operating lease discount rate
8.15
%
8.09
Weighted-average finance lease discount rate
7.34
7.33
As of September 30, 2025, lease obligation maturities were as follows:
Operating Leases
Finance Leases
30,294
446
121,778
1,792
118,479
1,819
112,277
1,846
111,540
1,575
1,074,049
16,852
Total future minimum obligations
1,568,417
24,330
Present value discount
(644,791
(10,898
Present value of net future minimum lease obligations
923,626
13,432
Current portion
(52,330
(857
Long-term obligations
As of September 30, 2025, we entered into 11 leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2025 through 2028 with initial lease terms of 15 to 20 years.
As of December 31, 2024, we entered into 10 leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2025 through 2027 with initial lease terms of 15 to 20 years.
During the three months ended September 30, 2025 and 2024, we completed one and four sale-leaseback transactions related to car wash locations, respectively, with aggregate consideration of $5,000 and $18,636, respectively, resulting in a net loss and net gain of $1,377 and $2,514, respectively, which are included in (gain) loss on sale of assets in the accompanying consolidated statements of operations and comprehensive income. Contemporaneously with the closing of the sales, we entered into lease agreements for the properties for initial 20-year terms. For the sale-leaseback transactions consummated in the three months ended September 30, 2025 and 2024, the cumulative initial annual rent for the properties was approximately $307 and $1,239, respectively, subject to annual escalations. These leases are accounted for as operating leases.
During the nine months ended September 30, 2025 and 2024, we completed one and eight sale-leaseback transactions related to car wash locations, respectively, with aggregate consideration of $5,000 and $37,381, respectively, resulting in a net loss and net gain of $1,377 and $1,553, respectively, which are included in (gain) loss on sale of assets in the accompanying consolidated statements of operations and comprehensive income. Contemporaneously with the closing of the sales, we entered into lease agreements for the properties for initial 20-year terms. For the sale-leaseback transactions consummated in nine months ended September 30, 2025 and
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2024, the cumulative initial annual rent for the property was approximately $307 and $2,426, respectively, subject to annual escalations. These leases are accounted for as operating leases.
11. Stockholders’ Equity
As of September 30, 2025, there were 1,000,000,000 shares of common stock authorized, 333,704,973 shares of common stock issued, and 327,532,052 shares of common stock outstanding.
As of December 31, 2024, there were 1,000,000,000 shares of common stock authorized, 329,866,784 shares of common stock issued, and 323,693,863 shares of common stock outstanding.
As of September 30, 2025 and December 31, 2024, there were 5,000,000 shares of preferred stock authorized, and none were issued or outstanding.
We use the cost method to account for treasury stock. As of September 30, 2025 and December 31, 2024, we had 6,172,921 shares of treasury stock. As of September 30, 2025 and December 31, 2024, the cost of treasury stock included in additional paid-in capital in the accompanying consolidated balance sheets was $28,895.
12. Stock-Based Compensation
We recognize stock-based compensation expense associated with stock options and restricted stock units ("RSUs"), and stock purchase rights. Stock options and RSUs are granted under the 2014 Stock Option Plan of Hotshine Holdings, Inc. (the “2014 Plan”) and 2021 Incentive Award Plan (the “2021 Plan”) while stock purchase rights are granted under the 2021 Employee Stock Purchase Plan (“2021 ESPP”).
Refer to our 2024 Form 10-K for additional details on employee stock incentive plans.
The grant date fair value of Time Vesting Options granted is determined using the Black-Scholes option-pricing model. The grant date fair value of stock purchase rights granted under the 2021 ESPP is determined using the Black-Scholes option-pricing model.
2021 ESPP
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock purchase rights granted under the 2021 ESPP during the periods presented:
Expected volatility
39.42 % - 42.14%
49.59% - 50.14%
Risk-free interest rate
4.30% - 4.44%
5.38% - 5.41%
Expected term (in years)
0.49 - 0.50
Expected dividend yield
None
Time Vesting Options
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of Time Vesting Options granted under the 2021 Plan during the periods presented:
46.74%
45.98%
4.07%
4.52%
6.0
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A summary of our stock option activity during the period presented is as follows:
Performance Vesting Options
Total Number of Stock Options
Weighted-Average Exercise Price
Outstanding as of December 31, 2024
9,137,994
1,897,467
11,035,461
5.70
Granted
1,583,512
7.08
Exercised
(1,122,743
(691,155
(1,813,898
1.43
Forfeited
(299,338
8.91
Outstanding as of September 30, 2025
9,299,425
1,206,312
10,505,737
6.55
Options vested or expected to vest as of September 30, 2025
8,854,931
10,061,243
9.16
Options exercisable as of September 30, 2025
5,782,380
6,988,692
5.83
The number and weighted-average grant date fair value of stock options during the period presented are as follows:
Number of Stock Options
Weighted-AverageGrant Date Fair Value
Unvested as of December 31, 2024
3,544,956
4.05
3.56
Vested
(1,450,382
4.12
(166,713
4.04
Unvested as of September 30, 2025
3,511,373
3.80
We granted 1,583,512 Time Vesting Options with a grant date fair value of $5,637 during the nine months ended September 30, 2025. There were no Performance Vesting Options granted during the nine months ended September 30, 2025.
The fair value of shares attributable to stock options that vested during the nine months ended September 30, 2025 was $10,426.
As of September 30, 2025, the weighted-average remaining contractual life of outstanding stock options was approximately 5.80 years.
A summary of our RSU activity during the period presented is as follows:
Restricted Stock Units
Weighted-Average Grant Date Fair Value
4,812,481
8.10
3,037,300
(1,835,398
8.56
(612,792
7.38
5,401,591
7.45
We granted 3,037,300 RSUs with a grant date fair value of $21,503 during the nine months ended September 30, 2025.
The fair value of shares attributable to RSUs that vested during the nine months ended September 30, 2025 was $13,067.
As of September 30, 2025, the weighted-average remaining contractual life of outstanding RSUs was approximately 9.00 years.
We estimated a forfeiture rate of 10.26% for awards with service-based vesting conditions based on historical experience and future expectations of the vesting of these share-based payments. We used this rate as an assumption in calculating stock-based compensation expense for Time Vesting Options, RSUs, and stock purchase rights granted under the 2021 ESPP.
Total stock-based compensation expense, by caption, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:
2,800
2,719
8,376
7,657
3,773
3,972
11,517
11,186
Total stock-based compensation expense
Total stock-based compensation expense, by award type, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:
1,515
1,607
4,889
4,566
RSUs
4,886
4,897
14,448
13,652
172
187
556
As of September 30, 2025, total unrecognized compensation expense related to unvested Time Vesting Options was $7,567, which is expected to be recognized over a weighted-average period of 3.48 years.
As of September 30, 2025, there was no unrecognized compensation expense related to unvested Performance Vesting Options as the completion of the IPO satisfied the performance condition and as a result, all outstanding Performance Vesting Options vested.
As of September 30, 2025, total unrecognized compensation expense related to unvested RSUs was $20,976, which is expected to be recognized over a weighted-average period of 2.08 years.
As of September 30, 2025, total unrecognized compensation expense related to unvested stock purchase rights under the 2021 ESPP was $96, which is expected to be recognized over a weighted-average period of 0.13 years.
13. Commitments and Contingencies
Litigation
We are involved from time to time in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. The Company does not believe that any proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows; it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.
Insurance
We carry a broad range of insurance coverage, including general and business auto liability, commercial property, workers’ compensation, cyber risk, and general umbrella policies. As of September 30, 2025 and December 31, 2024, we accrued $6,529 and $4,803, respectively, for assessments on insurance claims filed, which are included in other accrued expenses in the accompanying consolidated balance sheets. As of September 30, 2025 and December 31, 2024, we recorded $5,341 and $4,250, respectively, in receivables from its non-healthcare insurance carriers related to these insurance claims, which are included in other receivables in the accompanying consolidated balance sheets. The receivables are paid when the claim is finalized, and the reserved amounts on these claims are expected to be paid within one year.
14. Segment Information
The Company operates as one operating segment where it derives its revenues from activities related to providing car wash services at its car wash locations that are geographically diversified throughout the United States and have similar economic characteristics and nature of services.
To assess consolidated performance the chief operating decision maker (“CODM”), who is the Chief Executive Officer, evaluates the operating results and performance through net income. Our CODM regularly reviews net income as reported on the consolidated statement of operations and comprehensive income and total assets as reported on the consolidated balance sheet for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. As presented on the consolidated statements of operations and comprehensive income, the CODM views consolidated expense
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information related to the cost of labor and chemicals, other store operating expenses, and general and administrative expenses to be significant and there are no other significant segment expenses or items that would require disclosure.
15. Subsequent Events
On October 20, 2025, we acquired the assets of five express car wash locations in Lubbock, Texas from Whistle Express. Due to the timing of this acquisition, the initial accounting, including estimating the fair value of assets acquired, has not yet been completed.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our 2024 Form 10-K. This discussion contains forward-looking statements based upon our current plans, expectations and beliefs, which are subject to risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in other parts of this Quarterly Report on Form 10-Q and in Part I, Item 1A. “Risk Factors” and in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Form 10-K.
Who We Are
Mister Car Wash, Inc. is the nation's leading car wash brand, primarily offering express exterior cleaning services, with interior cleaning services at select locations, across 527 car washes in 21 states as of September 30, 2025. We offer a monthly subscription program, which we call the Unlimited Wash Club® (“UWC”), as a flexible, quick, and convenient option for customers to keep their cars clean. Our scale and over 25 years of innovation allow us to drive operating efficiencies and invest in training, infrastructure, and technology that improve speed of service, quality, and sustainability and realize strong financial performance.
Factors Affecting Our Business and Trends
We believe that our business and growth depend on a number of factors that present significant opportunities for us and may involve risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” of our 2024 Form 10-K.
•
Growth in comparable store sales. Comparable store sales have been a driver of our net revenue growth. We will seek to continue to grow our comparable store sales by increasing the number of UWC Members, maximizing efficiency and throughput of our car wash locations, optimizing marketing spend to add new customers, and increasing customer visitation frequency.
Number and loyalty of UWC Members. The UWC program is an important element of our business. UWC Members contribute a large portion of our net revenue and provide recurring revenue through their monthly membership fees.
Labor management. Hiring and retaining skilled team members and experienced management represents one of our largest investments. We believe people are the key to our success and we have been able to successfully attract and retain engaged, high-quality team members by paying competitive wages, offering attractive benefit packages, and providing robust training and development opportunities. While the competition for skilled labor is intense and subject to high turnover, we believe our approach to wages and benefits will continue to allow us to attract suitable team members and management to support our growth.
In addition, beginning in the first half of 2025, the United States government announced new tariffs on goods imported from various countries to the United States. Countries subject to such tariffs have imposed, or may in the future impose, reciprocal or retaliatory tariffs or trade policies. While we believe in the strength of our business, the potential macroeconomic impacts of these actions, if implemented, are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition. Specifically, negative macroeconomic impact on consumers affecting general discretionary income, consumer confidence, or purchasing patterns may reduce demand for our services.
Factors Affecting the Comparability of Our Results of Operations
Our results have been affected by, and may in the future be affected by, the following factors, which must be understood in order to assess the comparability of our period-to-period financial performance and condition.
While we continue to explore and evaluate acquisition opportunities, more recently, a component of our growth strategy has been to grow through greenfield development of Mister Car Wash locations, with particular focus on Express Exterior Locations, and we anticipate further pursuit of this strategy in the future. We believe such a strategy will provide a more controllable pipeline of unit growth for future locations in existing and adjacent markets.
The comparability of our results may be impacted by the inclusion of financial performance of greenfield locations that have not delivered a full fiscal year of financial results nor matured to average unit volumes, which we typically expect after approximately three full years of operation.
Key Performance Indicators
We prepare and analyze various operating and financial data to assess the performance of our business and to help in the allocation of our resources. The key operating performance and financial metrics and indicators we use are set forth below, as of and for the three and nine months ended September 30, 2025 and 2024.
(Dollars in thousands)
Financial and Operating Data:
Location count (end of period)
527
501
Comparable store sales growth
3.1
2.9
3.4
2.1
UWC Members (in thousands, end of period)
2,227
2,110
UWC sales as a percentage of total wash sales
77
74
75
73
Net income margin
10.4
9.0
10.5
8.2
Adjusted EBITDA
86,792
78,804
259,487
242,668
Adjusted EBITDA margin
32.9
31.6
32.8
32.6
Our location count refers to the total number of car wash locations at the end of a period, inclusive of new greenfield locations and acquired locations and offset by closed locations. The total number of locations that we operate, as well as the timing of location openings, acquisitions, and closings, have, and will continue to have, an impact on our performance. In the three and nine months ended September 30, 2025, we increased our location count by 5 and 13 greenfield locations, respectively.
Our Express Exterior Locations, which offer express exterior cleaning services, comprise 464 of our current locations and our Interior Cleaning Locations, which offer both express exterior cleaning services and interior cleaning services, comprise 63 of our current locations.
We consider a location a comparable store on the first day of the 13th full calendar month following a greenfield location’s first day of operations, or for acquired locations, the first day of the 13th full calendar month following the date of acquisition. A location converted from an Interior Cleaning Location format to an Express Exterior Location format is excluded when the location did not offer interior cleaning services in the current period but did offer interior cleaning services in the prior year period. Comparable store sales growth is the percentage change in total wash sales of all comparable store car washes.
Increasing the number of new locations is a component of our growth strategy and as we continue to execute on our growth strategy, we expect that a significant portion of our sales growth will be attributable to non-comparable store sales. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy.
Members of our monthly subscription service are known as Unlimited Wash Club Members, or UWC Members. We view the number of UWC Members and the growth in the number of UWC Members on a net basis from period to period as key indicators of our revenue growth. The number of UWC Members has grown over time as we have acquired new customers and retained previously acquired customers. There were approximately 2.2 million UWC Members as of September 30, 2025. UWC Members grew by approximately 5% from December 31, 2024 through September 30, 2025.
UWC sales as a percentage of total wash sales represents the penetration of our subscription membership program as a percentage of our overall wash sales. Total wash sales are defined as the net revenue generated from express exterior cleaning services and interior cleaning services for both UWC Members and retail customers. UWC sales as a percentage of total wash sales is calculated as sales generated from UWC Members as a percentage of total wash sales. UWC sales were 77% and 74% of our total wash sales for the three months ended September 30, 2025 and 2024, respectively. UWC sales were 75% and 73% of our total wash sales for the nine months ended September 30, 2025 and 2024, respectively.
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Adjusted EBITDA is a non-GAAP measure of our operating 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 generally accepted accounting principles in the United States of America (“U.S. GAAP”). Adjusted EBITDA is defined as net income before interest expense, net, income tax provision, depreciation and amortization expense, (gain) loss on sale of assets, stock-based compensation expense, acquisition expenses, non-cash rent expense, debt refinancing costs, and other nonrecurring charges. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenues for a given period.
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in future periods, and any such modification may be material. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Management believes Adjusted EBITDA is helpful in highlighting trends in our 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. We also use Adjusted EBITDA in connection with establishing discretionary annual incentive compensation; to evaluate in conjunction with U.S. GAAP measures of performance, the effectiveness of our business strategies; to make budgeting decisions; and because our Credit Agreement uses measures similar to Adjusted EBITDA to measure our compliance with certain covenants.
Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as a substitute for net income, net income margin, or any other financial measure presented in accordance with GAAP. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.
The following is a reconciliation of net income to Adjusted EBITDA for the periods presented.
22,400
21,182
(Gain) loss on sale of assets, net (a)
Stock-based compensation expense (b)
6,601
6,774
20,991
20,367
Acquisition expenses (c)
1,201
3,814
1,976
Non-cash rent expense (d)
1,647
1,560
5,265
4,542
Debt refinancing costs (e)
Employee retention credit
Other (f)
331
1,826
8,167
Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024
100
41
40
)%
0
(0
80
Dollar change compared to prior period
14,088
46,933
Percentage change compared to prior period
The increase in net revenues for the three months ended September 30, 2025 was primarily attributable to growth in UWC Members, favorable wash package mix, price increases, and the year-over-year addition of 26 locations.
The increase in net revenues for the nine months ended September 30, 2025 was primarily attributable to growth in UWC Members, favorable wash package mix, price increases, and the year-over-year addition of 26 locations.
Percentage of net revenues
2,964
9,494
The increase in cost of labor and chemicals for the three months ended September 30, 2025 was primarily attributable to an increase in volume and the year-over-year addition of 26 locations, as well as increased store labor rates, partially offset by labor optimization and lower chemical costs due to new formulations and strategic partnerships.
The increase in cost of labor and chemicals for the nine months ended September 30, 2025 was primarily attributable to an increase in volume and the year-over-year addition of 26 locations, as well as increased store labor rates, partially offset by labor optimization and lower chemical costs due to new formulations and strategic partnerships.
23
6,924
29,095
The increase in other store operating expenses for the three months ended September 30, 2025 was primarily attributable to the year-over-year addition of 26 locations, increased utilities and facilities expenses, as well as additional rent expense for the addition of 30 net new land and building leases between periods.
The increase in other store operating expenses for the nine months ended September 30, 2025 was primarily attributable to the year-over-year addition of 26 locations, increased utilities and maintenance expenses, as well as additional rent expense for the addition of 30 net new land and building leases between periods.
(2,743
(7,593
(9
The decrease in general and administrative expenses for the three months ended September 30, 2025 was primarily attributable to lower amortization expense due to intangible assets that fully amortized in the prior year and decreases in other expenses.
The decrease in general and administrative expenses for the nine months ended September 30, 2025 was primarily attributable to the debt refinancing costs in the prior year and decreased amortization expense due to intangible assets that fully amortized in the prior year, partially offset by investments in marketing as well as other costs to support strategic growth initiatives.
4,675
4,101
(244
(743
The change in (gain) loss on sale of assets, net for the three months ended September 30, 2025 was primarily driven by gains associated with sale-leaseback activity in the prior year compared to losses associated with sale-leaseback activity and asset retirements in the current year.
The change in (gain) loss on sale of assets, net for the nine months ended September 30, 2025 was primarily driven by gains associated with sale-leaseback activity in the prior year compared to losses associated with sale-leaseback activity and asset retirements in the current year.
24
(6,599
(12,396
(32
(22
The decrease in total other expense, net for the three months ended September 30, 2025 was attributable to a decrease in interest expense, net driven by lower average interest rates, $91.6 million of principal payments on the First Lien Term Loan, effective interest rate swap, and reduction in outstanding borrowings under the Revolving Commitment between periods.
The decrease in total other expense, net for the nine months ended September 30, 2025 was attributable to a decrease in interest expense, net driven by lower average interest rates, and $91.6 million of principal payments on the First Lien Term Loan between periods, as well as $1.9 million loss on extinguishment of debt related to our debt refinancing activity in the prior year, partially offset by the $5.2 million gain related to the recognition of an employee retention credit in the prior year.
3,798
58
The increase in income tax provision for the three months ended September 30, 2025 was primarily driven by the increase in pre-tax income, tax benefits from discrete items in the prior year and unfavorable income tax impact from equity awards activity as compared to the prior year.
The increase in income tax provision for the nine months ended September 30, 2025 was primarily driven by the increase in pre-tax income reduced by the favorable income tax impact from equity awards activity compared to the prior year.
25
Liquidity and Capital Resources
Our primary requirements for liquidity and capital are to fund our investments in our core business, which includes lease payments, pursue greenfield location development and acquisitions of new locations, and to service our indebtedness. Our primary sources of liquidity are cash provided by operations, sale-leaseback transactions, and utilization of our credit facilities.
As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $35.7 million and $67.5 million, respectively, and $299.9 million and $299.8 million, respectively, of available borrowing capacity under our Revolving Commitment.
For a description of our credit facilities and our recent debt refinancing, please see Note 7 Debt in the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. As of September 30, 2025, we were in compliance with the covenants under the Credit Agreement.
We believe that our existing sources of liquidity and capital will be sufficient to finance our growth strategy and operations, as well as planned capital expenditures, for at least the next 12 months and for the foreseeable future.
Operating Activities. For the nine months ended September 30, 2025, net cash provided by operating activities was $225.7 million and was comprised of net income of $83.0 million, increased by $159.3 million as a result of non-cash adjustments including depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, (gain) loss on sale of assets, net, and amortization of debt issuance costs. Changes in working capital balances decreased cash provided by operating activities by $16.6 million and were primarily driven by operating lease payments partially offset by the change in timing of payment and receipt of receivables, payables, and accrued expenses.
For the nine months ended September 30, 2024, net cash provided by operating activities was $198.8 million and was comprised of net income of $61.1 million, increased by $144.5 million as a result of non-cash adjustments comprised primarily of depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, a gain on disposal of property and equipment, a loss on extinguishment of debt, and amortization of debt issuance costs. Changes in working capital balances decreased cash provided by operating activities by $6.8 million and were primarily driven by operating lease payments and increases in other receivables, prepaid expenses and other current assets, partially offset by decreases to accounts receivable, net, inventory and other noncurrent assets and liabilities and increases in accounts payable, accrued expenses, and deferred revenue.
Investing Activities. For the nine months ended September 30, 2025, net cash used in investing activities was $171.8 million and was primarily comprised of investments in property and equipment to support our greenfield development and other initiatives, offset by the sale of property and equipment.
For the nine months ended September 30, 2024, net cash used in investing activities was $223.5 million and was primarily comprised of investments in property and equipment to support our greenfield development and other initiatives, offset by the sale of property and equipment.
Financing Activities. For the nine months ended September 30, 2025, net cash used in financing activities was $85.8 million and was primarily comprised of payments for the First Lien Term Loan and finance lease obligations, partially offset by proceeds related to the issuance of common stock under employee plans.
For the nine months ended September 30, 2024, net cash provided by financing activities was $22.1 million and was primarily comprised of proceeds from our refinancing of the First Lien Term Loan and Revolving Commitment, partially offset by payments for payroll tax withholdings to settle cashless stock option exercises, payments on debt borrowings and Revolving Commitment, and payments of deferred financing costs due to our debt refinancing.
Free Cash Flow
Free cash flow and free cash flow excluding growth capital expenditures are non-GAAP liquidity measures used by management as additional cash flow metrics. Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment in a period. Free cash flow excluding growth capital expenditures is defined as operating cash flows less purchases of maintenance property and equipment. Free cash flow includes the impact of capital expenditures, providing a supplemental view of cash generation. Free cash flow excluding growth capital expenditures includes purchases of property and equipment in a period, which are uses of cash that are necessary to maintain the Company's existing business operations, including its washes and support functions. Free cash flow excluding growth capital expenditures provides a supplemental view of cash flow generation before investments in growth capital, which expand future business operations, including the opening or improvement of washes and service capabilities. Free cash flow and free cash flow excluding growth capital expenditures have certain limitations, including that they do
not reflect adjustments for certain non-discretionary cash expenditures, such as mandatory debt repayments or payments made for business acquisitions.
The following is a reconciliation of free cash flow and free cash flow excluding growth capital expenditures to net cash provided by operating activities for the periods presented.
Adjustments:
Less: Maintenance capital expenditures
(23,717
(24,624
Free cash flow excluding growth capital expenditures
202,016
174,216
Less: Growth capital expenditures
(154,937
(235,272
Free cash flow
47,079
(61,056
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and estimates based on the facts and circumstances. Actual results could differ from those estimates.
The significant accounting policies and estimates used in preparation of the consolidated financial statements are described in our 2024 Form 10-K. There have been no material changes to our significant accounting policies during the three and nine months ended September 30, 2025.
Recent Accounting Pronouncements
See Note 2 Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our exposure to market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our 2024 Form 10-K.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our President and Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2025 and concluded our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Except as set forth in Note 13 - Commitments & Contingencies to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes to the legal proceedings described in Part I "Item 3. Legal Proceedings" and Note 18 Commitments & Contingencies to the consolidated financial statements of our 2024 Form 10-K.
Item 1A. Risk Factors.
There have been no material changes to the risk factors described in Part I. Item 1A. "Risk Factors" of our 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plan Arrangements
During the three months ended September 30, 2025, none of the directors or officers of the Company adopted, modified or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as those terms are defined under Item 408 of Regulation S-K.
Item 6. Exhibits.
Exhibit
Number
Description
Form
File. No
Filing Date
Filed/Furnished Herewith
Amended and Restated Certificate of Incorporation of the Company
8-K
001-40542
3.2
06/01/2022
Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company
06/01/2023
3.3
Amended and Restated Bylaws of the Company
07/02/2021
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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Inline XBRL Taxonomy Extension Label Linkbase Document
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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* Filed herewith.
** Furnished herewith.
† Indicates management contract or compensatory plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 31, 2025
By:
/s/ John Lai
John Lai
Chairperson, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Jedidiah Gold
Jedidiah Gold
Chief Financial Officer
(Principal Financial Officer)