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What changed in Mister Car Wash, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Mister Car Wash, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+190 added−207 removedSource: 10-K (2025-02-21) vs 10-K (2023-12-31)

Top changes in Mister Car Wash, Inc.'s 2024 10-K

190 paragraphs added · 207 removed · 168 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFounded in 1996, we employ an efficient, repeatable and scalable process, which we call the “Mister Experience,” to deliver a clean, dry and shiny car every time. The core pillars of the “Mister Experience” are providing the highest quality car wash and ensuring the experience is quick and convenient.
Biggest changePrimarily offering express exterior cleaning services, we provide the highest quality car wash, ensuring our customers a quick and convenient experience, which we call the “Mister Experience.” Through our advanced technology and dedication to exceptional customer experiences, we deliver a clean, dry and shiny car every time.
Our key purchases include car wash equipment and parts and wash chemicals. While we maintain a limited stock of parts and supplies for repairs and maintenance, most equipment, chemicals, and other supplies are purchased on an as-needed basis, which generally are shipped directly from the vendors to our locations.
Our key purchases include car wash equipment and parts and wash chemicals. While we maintain a limited stock of parts and supplies for repairs and maintenance, most equipment, chemicals, and other supplies are purchased on an as-needed basis, which generally are shipped directly from the vendors to our 3 locations.
We plan to continue to invest in this part of our growth strategy and have a development pipeline for future locations in existing and adjacent markets nationwide. Pursue Opportunistic Acquisitions in Highly Fragmented Industry We will continue to employ a disciplined approach to acquisitions, carefully selecting locations that meet our criteria for a potential Mister Car Wash site.
We plan to continue investing in this part of our growth strategy and have a development pipeline for future locations in existing and adjacent markets nationwide. Pursue Opportunistic Acquisitions in Highly Fragmented Industry We will continue to employ a disciplined approach to acquisitions, carefully selecting locations that meet our criteria for a potential Mister Car Wash site.
Our customer service, convenient locations and easy-to-manage membership programs have helped position our locations as the “go-to” destinations for our customers’ car wash needs. 3 Markets We are the largest national car wash brand and have developed extensive resources and capabilities over our 25-year history.
Our customer service, convenient locations and easy-to-manage membership programs have helped position our locations as the “go-to” destinations for our customers’ car wash needs. Markets As the largest national car wash brand, we have developed extensive resources and capabilities over our 25-year history.
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov. 6
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov. 5
“Risk Factors – Risks Related to Governmental Regulation – Our locations are subject to certain environmental laws and regulations.” Available Information Our website address is www.mistercarwash.com .
“Risk Factors – Risks Related to Government Regulation – Our locations are subject to certain environmental laws and regulations.” Available Information Our website address is www.mistercarwash.com .
Resources Our Proprietary Products and Advanced Technology Our research and development team is responsible for car wash processes, equipment and technology improvements. The team tests new products, formulations, processes and ideas in select markets before rolling out improvements and changes across the broader platform.
Resources Our Proprietary Products and Advanced Technology Our research and development (“R&D”) team is responsible for car wash processes, equipment and technology improvements. The team tests new products, formulations, processes and ideas in select markets before rolling out upgrades and changes across the broader platform.
Key Growth Drivers Grow Our UWC Members to Drive Predictable Earnings Growth and Higher Annual Customer Spend We believe there is an opportunity to continue to grow UWC penetration in core, acquired and greenfield locations. In 2023, we increased overall UWC penetration from 68% to 71% of total wash sales.
Key Growth Drivers Grow Our UWC Members to Drive Predictable Earnings Growth and Higher Annual Customer Spend We believe there is an opportunity to continue to grow UWC penetration in core, acquired and greenfield locations. In 2024, we increased overall UWC penetration from 71% to 74% of total wash sales.
As of December 31, 2023, we had approximately 56 trademark registrations and applications, including registrations for “Mister Car Wash,” “Hotshine,” “Mister Hotshine” and “Unlimited Wash Club,” and held one U.S. patent, one foreign patent and one pending U.S. patent application. Our issued patents are expected to expire between 2024 and 2025. We have also registered the Internet domain name: “mistercarwash.com”.
As of December 31, 2024, we had approximately 48 trademark registrations and applications, including registrations for “Mister Car Wash,” “Hotshine,” “Mister Hotshine” and “Unlimited Wash Club,” and held two U.S. patents and one pending U.S. patent application. Our issued patents are expected to expire between 2025 and 2040. We have also registered the Internet domain name: “mistercarwash.com”.
Competitive Conditions The car wash industry is fragmented, and we compete with a variety of operators including national, regional and local independent car wash operators, and gasoline and convenience retailers that also offer car washes. We believe our scale allows us to compete effectively due to our convenience, quality, price, and service.
Competitive Conditions The car wash industry is highly fragmented, and we compete with a variety of operators including national, regional and local independent car wash operators, as well as gasoline and convenience retailers that also offer car washes. We believe our scale enables us to compete effectively due to our convenience, quality, price, and service.
In 2018, we entered into an agreement with a supplier of a comprehensive suite of hardware, software, and management systems for our car wash locations which better track our membership and customer loyalty programs, streamline our operations and enhance our ability to track costs.
In 2018, we entered into an agreement with a supplier of a comprehensive suite of hardware, software, and management systems for our car wash locations which better tracks our membership and customer loyalty programs, streamlines our operations and enhances our ability to track costs.
Through continuous research and development, Mister Car Wash has 4 formulated a balanced wash process that factors in conveyor length, line speed, water quality, mechanical equipment, ambient temperature and soil conditions. Suppliers and Distribution We maintain long-term relationships with our key vendors. We believe our scale and large volume purchases provide us leverage in securing competitive pricing.
Through continuous R&D, Mister Car Wash has formulated a streamlined wash process that factors in conveyor length, line speed, water quality, mechanical equipment, ambient temperature and soil conditions. Suppliers and Distribution We maintain long-term relationships with our key vendors. We believe our scale and large volume purchases provide us leverage in securing competitive pricing.
Build Upon Our Established Success in Opening Greenfield Locations During 2023, we successfully opened 35 greenfield locations and expect to lead our future location growth through greenfield locations. We have developed a process for opening new greenfield locations, from site selection to post-opening local marketing initiatives, which has driven our greenfield performance consistently over time.
Build Upon Our Success in Opening Greenfield Locations During 2024, we successfully opened 39 greenfield locations and expect to primarily drive our future location growth through greenfield openings. We have developed a rigorous process for opening new greenfield locations, from site selection to post-opening local marketing initiatives, which has driven our greenfield performance consistently over time.
We estimate that the average UWC Member spends more than four times the retail car wash consumer, providing us an opportunity to increase our sales as penetration increases. At both new greenfield and acquired locations, we have developed proven processes for growing UWC membership per location.
We estimate that the average UWC Member spends more than four times the retail car wash consumer, providing us an opportunity to increase our sales as penetration increases. At both greenfield and acquired locations, we have developed processes that have produced continued growth of UWC memberships.
We post, and stockholders may access without charge, our recent filings and any amendments to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statement as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission ("SEC").
We post, and stockholders may access without charge, our recent filings and any amendments to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statement as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission ( “ SEC”). 4 We may use our website as a distribution channel of material information about the Company.
We have a track record of location growth through acquisitions and have a process for integrating acquired locations, which includes a variety of upgrades to each location that has led to the successful integration of over 100 acquisitions during our history.
We have a proven track record of driving location growth through acquisitions, as well as a stringent process for integrating and upgrading acquired locations that has led to the successful integration of over 100 acquisitions during our history.
We may use our website as a distribution channel of material information about the Company. Financial and other important information regarding the Company is routinely posted on and accessible through the Investor Relations sections of its website at https://ir.mistercarwash.com .
Financial and other important information regarding the Company is routinely posted on and accessible through the Investor Relations sections of its website at https://ir.mistercarwash.com .
This will allow us to continue our focus on competitive wages and benefits as well as investing in the training and development of our team members. We invest in the training and development of our team members through our specialized programs and our MisterLearn training platform that allows us to develop and promote entry-level team members to leadership roles.
We invest in the training and development of our team members through our specialized programs and our MisterLearn training platform that allows us to develop and promote entry-level team members to leadership roles.
We offer a monthly subscription program, Unlimited Wash Club ® ("UWC"), as a flexible, quick and convenient option for customers to keep their cars clean. Our purpose is simple: Inspire People to Shine®. This starts with our people.
In addition, with over 2.1 million members, we offer North America's largest monthly car wash subscription program, Unlimited Wash Club® ( “ UWC”), as a flexible, quick and convenient option for customers to keep their cars clean Our purpose is simple: Inspire People to Shine®. This starts with our own people.
Customers purchase a wash or sign-up for a UWC membership through sales kiosks or assisted by team members and either remain in their vehicle through the tunnel and wash process or wait in the lobby. Customers who purchase interior cleaning services have their vehicles vacuumed and cleaned by Mister team members.
Interior Cleaning Locations Interior Cleaning Locations offer exterior and interior cleaning services, including vacuuming by our team members . Customers can purchase a wash or sign-up for a UWC membership, either through sales kiosks or with the assistance of Mister team members, and either remain in their vehicle through the tunnel and wash process or wait in the lobby.
Item 1. Business Who We Are Mister Car Wash, Inc. is the largest national car wash brand, primarily offering express exterior cleaning services, with interior cleaning services at select locations, across 476 car wash locations in 21 states, as of December 31, 2023.
Item 1. Business Who We Are Founded in 1996, Mister Car Wash, Inc. is the largest national car wash brand, with 514 locations in 21 states, as of December 31, 2024.
The portfolio of cars serviced across our locations is diverse and represents a balance across new and old cars and across all vehicle price points.
Given the broad appeal of our services, we have a wide variety of customers spanning a broad set of demographics and income levels. The portfolio of cars serviced across our locations is diverse and represents a balance across new and old cars and across all vehicle price points.
Products and Services Our car wash locations consist of two formats: (a) Express Exterior Locations (406 locations as of December 31, 2023) and (b) Interior Cleaning Locations (70 locations as of December 31, 2023). All locations offer express exterior wash packages and have exterior-only lanes. Every wash includes our T3 Cleaning Conditioner, Wheel Cleaner, and Dynamic Dry system.
Products and Services Our car wash locations consist of two formats: (a) Express Exterior Locations (450) and (b) Interior Cleaning Locations (64) as of December 31, 2024. All locations offer express exterior wash packages and have exterior-only lanes. Express Exterior Locations Express Exterior Locations offer self-drive exterior cleaning services and include free vacuums available for customer use.
Express Exterior Locations Express Exterior Locations offer self-drive exterior cleaning services and include free vacuums available for customer use. Customers purchase a wash or sign-up for a UWC membership through sales kiosks or assisted by team members and remain in their vehicle through the tunnel and wash process.
Customers can purchase a wash or sign-up for a UWC membership, either through sales kiosks or with the assistance of Mister team members, and remain in their vehicle through the tunnel and wash process. Customers have the option to use free self-serve vacuums at any time before or after their exterior wash.
We believe our key differentiators include our unified national brand, robust training & development programs which generate a talent pipeline, dedicated regional support infrastructure, sophisticated technology and proprietary product formulation, and strategic market density "network effect".
Our scale, consistency of operations at every location and culture of continuous improvement have enabled us to deliver an efficient and high-quality customer experience with every wash. 2 We believe our key differentiators include our unified national brand, robust training and development programs which cultivate a talent pipeline, dedicated regional support infrastructure, sophisticated technology and proprietary product formulation, and strategic market density “ network effect”.
To recruit and retain the most qualified team members in the industry, we focus on treating our team members well by paying them competitive wages, offering them attractive benefit packages, offering robust training and development opportunities, and providing an operational support infrastructure with opportunities for upward mobility.
Human Capital We are centered around our purpose of Inspiring People to Shine, and that starts with our team members. To recruit and retain the most qualified team members in the industry, we focus on competitive wages and benefit packages, as well as offering robust training and development opportunities.
We believe Mister Car Wash offers an affordable, feel-good experience, enjoyed by all who value a clean, dry and shiny car.
We believe our purpose-driven culture is critical to our success. We believe Mister Car Wash offers an affordable, feel-good experience, enjoyed by all who value a clean, dry and shiny car. As we grow, we are dedicated to putting our team members first to deliver a consistent, convenient and superior car wash experience at scale.
We believe engaged employees are more productive, are more likely to have a positive impact on other employees around them and are more likely to deliver great customer service. Team Members We continually focus our efforts on refining our staffing model to ensure our wash locations run as efficiently as possible.
We believe engaged employees are more productive, are more likely to have a positive impact on other employees and are more likely to deliver memorable experiences to our customers. Through these efforts, we expect to build strength in our bench of future leaders while increasing retention and diversity, as well as ensuring our wash locations run as efficiently as possible.
Our Customers We serve a diverse mix of customers, which include individual retail customers and UWC Members, which include both retail and corporate customers. Given the broad appeal of our services, we have a wide variety of customers spanning a broad set of demographics.
Customers who purchase interior cleaning services have their vehicles vacuumed and cleaned by Mister team members. Our Customers We serve a diverse mix of customers, including individual retail customers and UWC Members, which are comprised of both retail and corporate customers.
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We attract and retain a pool of talent by investing in their training and development through our specialized programs and our MisterLearn training platform that allows us to develop and promote entry-level team members to leadership roles. As a result, our team members are highly engaged and deliver memorable experiences to our customers.
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The Mister brand is deeply rooted in delivering quality service, fostering friendliness, and demonstrating a genuine commitment to the communities it serves, while prioritizing responsible environmental practices and resource management. We have a proven, people-first approach that is scalable and has enabled us to develop a passionate, world class team of professionals.
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We have proven our people-first approach is scalable and has enabled us to develop a world class team, comprised of both internally developed talent and external hires from top service organizations. We believe our purpose-driven culture is critical to our success.
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As of December 31, 2024, we employed approximately 6,640 team members, which is a 1% increase from the prior year. This increase was primarily due to adding 38 net new locations throughout the year.
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As we grow and to serve the approximately 290 million registered vehicles in the United States as of the end of 2023, we are dedicated to putting our team members first and delivering a consistent, convenient and high-quality car wash experience at scale.
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Government Regulation and Environmental Matters We are subject to various federal, state, and local laws and regulations, including those governing consumer protection, environmental protection, data privacy, labor and employment, tax, and other laws and regulations.
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Customers have the option to use free self-serve vacuums at any time before or after their exterior wash. Interior Cleaning Locations Interior Cleaning Locations offer exterior and interior cleaning services, including vacuuming by our team members .
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We are not aware of any federal, state, local, or other laws or regulations that are likely to materially alter or impact our revenues, cash flow, or competitive positions or result in any material capital expenditures.
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Our scale, consistency of operations at every location and culture of continuous improvement have allowed us to develop an efficient and high-quality customer experience with every wash.
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However, we cannot predict the effect on our operations of any pending or future legislation or regulations or the future interpretation of any existing laws, including newly enacted laws, that may impact us. For further discussion, see Part I, Item 1A.
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Human Capital We are centered around our purpose of Inspiring People to Shine, and that starts with our team members.
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As a result, our team members are highly engaged and deliver memorable experiences to our customers. Through these efforts, we expect to build strength in our bench of future leaders while increasing retention and diversity. As of December 31, 2023, we employed approximately 6,600 team members, which is a 4% increase from the prior year.
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This increase was primarily due to adding 40 net locations throughout the year. 5 Environmental Matters & Other Governmental Regulation We are subject to various laws and regulations, including those governing labor and employment including minimum wages and paid sick time, workplace safety, employee and public health, consumer protection, recurring debit and credit card charges, information security, consumer protection, data privacy, marketing and advertising, environmental protection and compliance, including recycling, waste and water usage, zoning and land use, taxation and public company compliance.
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We monitor changes in these laws and believe that we are in material compliance with applicable laws.
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We are subject to various federal, state and local environmental laws and regulations, including those relating to ownership and operation of underground storage tanks; the release or discharge of regulated materials into the air, water and soil; the generation, storage, handling, use, transportation and disposal of regulated materials, including wastes; the exposure of persons to hazardous materials; remediation of contaminated soil and groundwater; and the health and safety of employees dedicated to such transportation and storage activities.
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Environmental laws and regulations can restrict or impact our business activities in many ways, such as: • requiring the acquisition of certifications, registrations, permits or other authorizations or the provision of financial assurances in connection with the transportation, storage and sale of hazardous substances and other regulated activities; • requiring remedial action to mitigate releases of petroleum hydrocarbons, hazardous substances or wastes caused by our operations or attributable to former operators; • requiring capital expenditures to comply with environmental pollution control, cathodic protection or release detection requirements; • enjoining the operations of facilities deemed to be in noncompliance with environmental laws and regulations; and • imposing substantial liabilities for pollution resulting from our operations.
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Compliance with existing laws, rules, and regulations has not historically had a material impact on our capital expenditures, earnings or competitive position.
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With respect to acquired locations, we conduct due diligence regarding potential exposure to environmental liabilities and overall regulatory compliance but cannot be certain that we have identified or will identify all adverse environmental conditions or non-compliance with applicable laws, rules and regulations. For further discussion, see Part I, Item 1A.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe rely on a limited number of suppliers for most of the car wash equipment and certain other supplies we use in our operations. Our ability to secure such equipment and supplies from alternative sources as needed may be time-consuming or expensive or may cause a temporary disruption in our supply chain.
Biggest changeOur ability to secure such equipment and supplies from alternative sources as needed may be time-consuming or expensive or may cause a temporary disruption in our supply chain. We do not have a supplier contract with our main supplier of car wash tunnel equipment, and our orders are based on purchase orders.
We are subject to a number of federal regulations relating to the use of debit and credit cards, such as the Electronic Funds Act and the Truth in Lending Act of 1968, which provide guidelines and parameters for payment processing on debit cards and credit cards, respectively, and certain state regulations relating to automatic renewal, including, among others, the California Business & Professional Code Section 17601-17606, as amended, which provides requirements we must follow for the automatic renewal of subscription fees such as those charged to our UWC Members.
We are subject to a number of federal regulations relating to the use of debit and credit cards, such as the Electronic Funds Act and the Truth in Lending Act of 1968, which provide guidelines and parameters for payment processing on debit cards and credit cards, respectively, and certain state regulations relating to automatic renewal, including, among others, the California Business and Professional Code Section 17601-17606, as amended, which provides requirements we must follow for the automatic renewal of subscription fees such as those charged to our UWC Members.
These provisions include: • establishing a classified Board such that not all members of the Board are elected at one time; • allowing the total number of directors to be determined exclusively (subject to the rights of holders of any series of preferred stock to elect additional directors) by resolution of our Board and granting to our Board the sole power (subject to the rights of holders of any series of preferred stock or rights granted pursuant to the Stockholders’ Agreement) to fill any vacancy on the Board; 17 • providing that our stockholders may remove members of our Board only for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of our then-outstanding stock, following such time as LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock; • authorizing the issuance of “blank check” preferred stock by our Board, without further stockholder approval, to thwart a takeover attempt; • prohibiting stockholder action by written consent (and, thus, requiring that all stockholder actions be taken at a meeting of our stockholders), if LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock; • eliminating the ability of stockholders to call a special meeting of stockholders, except for LGP for so long as LGP beneficially owns, in the aggregate, at least 50% of the voting power of our common stock; • establishing advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon at annual stockholder meetings; and • requiring the approval of the holders of at least two-thirds of the voting power of all outstanding stock entitled to vote thereon, voting together as a single class, to amend or repeal our certificate of incorporation or bylaws if LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock.
These provisions include: • establishing a classified Board such that not all members of the Board are elected at one time; • allowing the total number of directors to be determined exclusively (subject to the rights of holders of any series of preferred stock to elect additional directors) by resolution of our Board and granting to our Board the sole power (subject to the rights of holders of any series of preferred stock or rights granted pursuant to the Stockholders’ Agreement) to fill any vacancy on the Board; • providing that our stockholders may remove members of our Board only for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of our then-outstanding stock, following such time as LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock; • authorizing the issuance of “blank check” preferred stock by our Board, without further stockholder approval, to thwart a takeover attempt; • prohibiting stockholder action by written consent (and, thus, requiring that all stockholder actions be taken at a meeting of our stockholders), if LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock; • eliminating the ability of stockholders to call a special meeting of stockholders, except for LGP for so long as LGP beneficially owns, in the aggregate, at least 50% of the voting power of our common stock; • establishing advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon at annual stockholder meetings; and • requiring the approval of the holders of at least two-thirds of the voting power of all outstanding stock entitled to vote thereon, voting together as a single class, to amend or repeal our certificate of incorporation or bylaws if LGP ceases to beneficially own, in the aggregate, at least 50% of the voting power of our common stock.
The credit agreements governing our Credit Facilities contain, and any agreements evidencing or governing other future debt may contain, certain restrictive covenants that limit our ability, among other things, to engage in certain activities that are in our long-term best interests, including our ability to: • incur liens; • incur or assume additional debt or amend our debt and other material agreements; • issue certain disqualified stock; • declare or make dividends or distributions and redeem, repurchase or retire equity interests; 11 • prepay, redeem or repurchase debt; • make investments, loans, advances, guarantees and acquisitions; • enter into agreements restricting the ability to pay dividends or grant liens securing the obligations under the credit agreements; • amend or modify governing documents; • enter into transactions with affiliates; • engage in certain business activities or alter the business conducted by us and our restricted subsidiaries; and • engage in certain mergers, consolidations and asset sales.
The credit agreements governing our Credit Facilities contain, and any agreements evidencing or governing other future debt may contain, certain restrictive covenants that limit our ability, among other things, to engage in certain activities that are in our long-term best interests, including our ability to: • incur liens; • incur or assume additional debt or amend our debt and other material agreements; • issue certain disqualified stock; • declare or make dividends or distributions and redeem, repurchase or retire equity interests; • prepay, redeem or repurchase debt; • make investments, loans, advances, guarantees and acquisitions; • enter into agreements restricting the ability to pay dividends or grant liens securing the obligations under the credit agreements; • amend or modify governing documents; • enter into transactions with affiliates; • engage in certain business activities or alter the business conducted by us and our restricted subsidiaries; and • engage in certain mergers, consolidations and asset sales.
Our ability to execute our growth strategy on favorable terms and successfully operate new locations may be exposed to significant risks, including, but not limited to, the following: • we may be unable to acquire a desired location or property because of competition from other investors with significant capital; 7 • even if we are able to acquire a desired location or property, competition from other potential acquirers may significantly increase the purchase price or result in other less favorable terms; • we may be unable to complete an acquisition because we cannot secure sale leaseback financing on favorable terms or at all; • we may spend more than budgeted amounts to make necessary improvements or renovations to acquired locations; • we may be unable to quickly and efficiently integrate acquired locations into our existing operations; • acquired properties may be subject to tax reassessment, which may result in higher-than-expected property tax payments; • loss of key staff at acquired locations or inability to attract, retain and motivate staff necessary for our expanded operations; • acquired locations or greenfield expansions in regions where we have not historically conducted business may subject us to new operational risks, laws, regulations, staff expectations, customs, and practices; and • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities, such as liabilities for the remediation of undisclosed environmental contamination; and claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the properties.
Our ability to execute our growth strategy on favorable terms and successfully operate new locations may be exposed to significant risks, including, but not limited to, the following: • we may be unable to acquire a desired location or property because of competition from other investors with significant capital; • even if we are able to acquire a desired location or property, competition from other potential acquirers may significantly increase the purchase price or result in other less favorable terms; • we may be unable to complete an acquisition because we cannot secure financing on favorable terms or at all; • we may spend more than budgeted amounts to make necessary improvements or renovations to acquired locations; • we may be unable to quickly and efficiently integrate acquired locations into our existing operations; • acquired properties may be subject to tax reassessment, which may result in higher-than-expected property tax payments; • loss of key staff at acquired locations or inability to attract, retain and motivate staff necessary for our expanded operations; • acquired locations or greenfield expansions in regions where we have not historically conducted business may subject us to new operational risks, laws, regulations, staff expectations, customs, and practices; and • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities, such as liabilities for the remediation of undisclosed environmental contamination; and claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the properties.
General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our services and exacerbate some of the other risks that affect our business, financial condition and results of operations.
General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, tariffs and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our services and exacerbate some of the other risks that affect our business, financial condition and results of operations.
In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our UWC Members’ credit cards or debit cards on a timely basis or at all, we could lose membership revenue, which would materially and adversely affect our operating results.
In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our UWC Members’ credit cards or debit cards on a timely basis or at all, we could lose membership revenue, which could materially and adversely affect our operating results.
Lastly, changes in the scope of our operations, including expanding into new geographies, could increase our income tax liabilities and have an adverse impact on our effective tax rate. Risks Related to Our Indebtedness and Capital Requirements Our indebtedness could adversely affect our financial health and competitive position.
Lastly, changes in the scope of our operations, including expanding into new geographies, could increase our income tax liabilities and have an adverse impact on our effective tax rate. 9 Risks Related to Our Indebtedness and Capital Requirements Our indebtedness could adversely affect our financial health and competitive position.
If we are unable to obtain adequate financing or financing on 12 terms satisfactory to us, it could have a material and adverse effect on our business, results of operations and financial condition. We are a holding company and depend on our subsidiaries for cash to fund operations and expenses.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, it could have a material and adverse effect on our business, results of operations and financial condition. We are a holding company and depend on our subsidiaries for cash to fund operations and expenses.
In addition, we are subject to environmental laws pursuant to which we could be strictly liable for any contamination at our current or former locations, or at third-party waste disposal sites, regardless of our knowledge of or responsibility for such contamination. Our locations are subject to certain environmental laws and regulations.
In addition, we are 11 subject to environmental laws pursuant to which we could be strictly liable for any contamination at our current or former locations, or at third-party waste disposal sites, regardless of our knowledge of or responsibility for such contamination. Our locations are subject to certain environmental laws and regulations.
We are not 13 presently aware of any material liability related to the costs of investigations and cleaning up sites of spills, disposals or other releases of hazardous materials at our current or former locations or business operations.
We are not presently aware of any material liability related to the costs of investigations and cleaning up sites of spills, disposals or other releases of hazardous materials at our current or former locations or business operations.
Although we believe these provisions benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against our directors and officers.
Although we believe these 16 provisions benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against our directors and officers.
A registration statement covering such shares has been filed and has been declared effective. Any sales of securities by these stockholders could have a material and adverse effect on the trading price of our common stock.
A registration statement covering such shares has been filed and has been declared effective. Any sales 15 of securities by these stockholders could have a material and adverse effect on the trading price of our common stock.
Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of the Delaware General Corporation Law ("DGCL"), could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares.
Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of the Delaware General Corporation Law (“DGCL”), could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares.
These costs and losses may not be adequately covered by applicable insurance coverage or other contractual rights available to us. We must comply with increasingly and complex privacy and security laws and regulations in the United States, including the California Consumer Privacy Act, as amended, and state data privacy laws that have been enacted to date.
These costs and losses may not be adequately covered by applicable insurance coverage or other contractual rights available to us. 13 We must comply with increasingly and complex privacy and security laws and regulations in the United States, including the California Consumer Privacy Act (the “CCPA”), as amended, and state data privacy laws that have been enacted to date.
We cannot assure you that our growth strategy will be successful, or that such expansion will be completed in the time frames or at the costs we estimate.
We cannot assure you that our 6 growth strategy will be successful, or that such expansion will be completed in the time frames or at the costs we estimate.
However, our historical operations, at limited locations inherited through acquisitions, involved using underground storage tanks (USTs) for fuel and chemicals. Some of these tanks remain on leased properties, with future obligations for removal and potential environmental remediation. Instances of contamination have been identified in the past, leading to remediation costs.
However, our historical operations, at limited locations obtained through acquisitions, involved using underground storage tanks (USTs) for fuel and chemicals. Some of these tanks remain on leased properties, with future obligations for removal and potential environmental remediation. Instances of contamination have been identified in the past, leading to remediation costs.
If we fail to acquire, open and operate new locations in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected. Our growth strategy depends on growing our location base, both through greenfield expansion and acquisitions, in existing and new geographic regions and operating our new locations successfully.
If we fail to acquire, open and operate new locations in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected. Our growth strategy depends on growing our location base, primarily through greenfield expansion and acquisitions, in existing and new geographic regions and operating our new locations successfully.
Moreover, holders of approximately 71% of our outstanding common stock as of the date of this Annual Report on Form 10-K have rights, pursuant to the Stockholders Agreement, to require us to file registration statements for the public sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
Moreover, holders of approximately 70% of our outstanding common stock as of the date of this Annual Report on Form 10-K have rights, pursuant to the Stockholders Agreement, to require us to file registration statements for the public sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
We depend on net cash provided by operating activities to pay our rent and other lease expenses and to fulfill our 10 other cash needs.
We depend on net cash provided by operating activities to pay our rent and other lease expenses and to fulfill our other cash needs.
There is continuing concern from members of the scientific community and the general public that emissions of greenhouse gases ("GHG") and other human activities have or will cause significant changes in weather patterns and increase the frequency or severity of extreme weather events, including droughts, wildfires and flooding.
There is continuing concern from members of the scientific community and the general public that emissions of greenhouse gases (“GHG”) and other human activities have or will cause significant changes in weather patterns and increase the frequency or severity of extreme weather events, including droughts, wildfires and flooding.
We rely on cash from our operating activities to make lease payments for the land and buildings where many of our locations are situated, which may strain our cash flow and expose us to potential liabilities and losses. We lease the land and buildings where a significant number of our locations are located.
We rely on cash from our operating activities to make lease payments for the land and buildings where many of our locations are situated, which may strain our cash flow and expose us to potential liabilities and losses. We lease the land and buildings for a significant number of our store locations.
As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment. 18 Item 1B. Unresolved Staff Comments None.
As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment. 17 Item 1B. Unresolved Staff Comments None.
Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to: • finance unanticipated working capital requirements; • develop or enhance our infrastructure and our existing services; • acquire complementary businesses, assets or services; • ensure the availability of sale-leaseback arrangements when we engage in an acquisition; • fund strategic relationships, including joint ventures and co-investments; • fund additional implementation engagements; and • respond to competitive pressures.
Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to: • finance unanticipated working capital requirements; • open new greenfield locations; • develop or enhance our infrastructure and our existing services; • acquire complementary businesses, assets or services; • ensure the availability of sale-leaseback arrangements when we engage in an acquisition; • fund strategic relationships, including joint ventures and co-investments; • fund additional implementation engagements; and • respond to competitive pressures.
In addition, the federal Clean Water Act ("CWA") and analogous state laws may require us to obtain and maintain individual permits or coverage under general permits for discharges of wastewater or storm water runoff.
In addition, the federal Clean Water Act (“CWA”) and analogous state laws may require us to obtain and maintain individual permits or coverage under general permits for discharges of wastewater or storm water runoff.
We may be unable to sustain or increase demand for our UWC subscription program, which could adversely affect our business, financial condition and results of operations and rate of growth.
Risks Related to Our Business We may be unable to sustain or increase demand for our UWC subscription program, which could adversely affect our business, financial condition and results of operations and rate of growth.
New federal or state legislation or regulations on greenhouse gas ("GHG") emissions that may be imposed in areas of the United States in which we conduct business and that apply to our operations could adversely affect our business.
New federal or state legislation or regulations on greenhouse gas 12 (“GHG”) emissions that may be imposed in areas of the United States in which we conduct business and that apply to our operations could adversely affect our business.
The realization of any of the above risks could significantly and adversely affect our ability to meet our financial expectations, our financial condition, results of operations, and cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations.
The realization of any of the above risks could significantly and adversely affect our ability to execute our growth strategy, meet our financial expectations, our financial condition, results of operations, and cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations.
The marked increase in the use of social media platforms that provide individuals with access to a broad audience of consumers and other interested persons results in the opportunity for dissemination of information, including inaccurate information. Information posted may be averse to our interests or inaccurate, each of which may harm our performance, prospects or business.
The marked increase in the use of social media platforms that provide individuals with access to a broad audience of consumers and other interested persons results in the opportunity for dissemination of information, including inaccurate information. Information posted may be adverse to our interests or inaccurate, each of which may harm our reputation and brand recognition, prospects or business.
We intend to continue to make significant investments to support our business growth, respond to business challenges or opportunities, develop new services, enhance our existing services and operating infrastructure and potentially acquire complementary businesses and assets. For the year ended December 31, 2023, our net cash provided by operating activities was $204.7 million.
We intend to continue to make significant investments to support our business growth, respond to business challenges or opportunities, develop new services, enhance our existing services and operating infrastructure and potentially acquire complementary businesses and assets. For the year ended December 31, 2024, our net cash provided by operating activities was $248.6 million.
Risks Related to Ownership of Our Common Stock We are a "controlled company" within the meaning of the NYSE rules and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements. Leonard Green & Partners, L.P.
Risks Related to Ownership of Our Common Stock We are a “controlled company” within the meaning of the NASDAQ rules and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements. Leonard Green & Partners, L.P.
We also are subject to the Payment Card Industry Data Security Standard ("PCI DSS"), issued by the PCI Council and to the American National Standards Institute ("ANSI") data encryption standards and payment network security operating guidelines, as well as the Fair and Accurate Credit Transactions Act ("FACTA").
We also are subject to the Payment Card Industry Data Security Standard ( “ PCI DSS”), issued by the PCI Council and to the American National Standards Institute ( “ ANSI”) data encryption standards and payment network security operating guidelines, as well as the Fair and Accurate Credit Transactions Act ( “ FACTA”).
Although we currently comply with the NYSE rules applicable to companies that do not qualify as a “controlled company,” as a “controlled company,” in the future we may elect not to comply with certain corporate governance standards, including the requirements: • that a majority of our board of directors consist of independent directors; • that our board of directors have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; • that our board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • for an annual performance evaluation of the nominating and corporate governance committee and compensation committee.
Although we currently comply with the NASDAQ rules applicable to companies that do not qualify as a “controlled company,” as a “controlled company,” in the future we may elect not to comply with certain corporate governance standards, including the requirements: 14 • that a majority of our board of directors consist of independent directors; • that our board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • that the nominating function of our board of directors be exercised by independent directors or by an independent committee.
Decreased fuel supplies are anticipated to increase fuel prices, which may adversely impact our transportation costs. Any shortage or interruption to our supply chain could reduce our sales and profit margins, which in turn may materially and adversely affect our business and results of operations. Our locations may experience difficulty hiring and retaining qualified personnel, resulting in higher labor costs.
Any shortage or interruption to our supply chain could reduce our sales and profit margins, which in turn may materially and adversely affect our business and results of operations. 8 Our locations may experience difficulty hiring and retaining qualified personnel, resulting in higher labor costs.
If we do not have the resources, expertise and consistent execution, or otherwise fail to develop successful strategies, to address these potential competitive disadvantages, we may lose customers and market share, and our business and results of operations could be adversely affected. 8 We may not be able to successfully implement our growth strategies on a timely basis or at all.
If we do not have the resources, expertise and consistent execution, or otherwise fail to develop successful strategies, to address these potential competitive disadvantages, we may lose customers and market share, and our business and results of operations could be adversely affected.
As of December 31, 2023, we had $897.2 million of indebtedness, net of unamortized debt issuance costs, outstanding pursuant to an amended and restated first lien credit agreement entered into on May 14, 2019 “(First Lien Term Loan”). To service this debt and any additional debt we may incur in the future, we need to generate cash.
As of December 31, 2024, we had $920.4 million of indebtedness outstanding pursuant to an amended and restated first lien credit agreement entered into on May 14, 2019, as amended, (“First Lien Term Loan”). To service this debt and any additional debt we may incur in the future, we need to generate cash.
We are subject to a number of risks and regulations related to credit card and debit card payments we accept. Our customers pay for our services using a variety of different payment methods, including credit and debit cards, gift cards, and prepaid cards. We rely on internal systems and those of third parties to process payment.
Our customers pay for our services using a variety of different payment methods, including credit and debit cards, gift cards, and prepaid cards. We rely on internal systems and those of third parties to process payment.
In addition, LGP’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock. 16 Our amended and restated certificate of incorporation could prevent us from benefiting from corporate opportunities that might otherwise have been available to us.
In addition, LGP’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock.
Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations in future periods. Risks Related to Our Business Global economic conditions, including inflation and supply chain disruptions, could adversely affect our operations.
Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations in future periods.
(“LGP”) has more than 50% of the voting power for the election of directors, and, as a result, we are considered a “controlled company” for the purposes of the New York Stock Exchange (“the NYSE”).
(“LGP”) has more than 50% of the voting power for the election of directors, and, as a result, we are considered a “controlled company” for the purposes of the Nasdaq Stock Market (“NASDAQ”).
As of December 31, 2023, we had $19.0 million of cash and cash equivalents, which were held for working capital purposes.
As of December 31, 2024, we had $67.5 million of cash and cash equivalents, which were held for working capital purposes.
Additionally, we do not have a supplier contract with our main supplier of car wash tunnel equipment, and our orders are based on purchase orders. As such, we are subject to the risk that a supplier will not continue to provide us with the required car wash tunnel equipment. We also do not carry a significant inventory of such equipment.
As such, we are subject to the risk that a supplier will not continue to provide us with the required car wash tunnel equipment. We also do not carry a significant inventory of such equipment.
To the extent that our intellectual property and other proprietary rights are not adequately protected, third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property or the intellectual property of our third-party licensors, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. 15 We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, which is expensive and could exceed applicable insurance coverage, could cause a diversion of resources and may not prove successful.
To the extent that our intellectual property and other proprietary rights are not adequately protected, third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property or the intellectual property of our third-party licensors, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm.
The historical transportation, distribution and storage of motor fuels (diesel fuel and gasoline) and other chemicals are subject to environmental protection and operational safety laws and regulations. As of December 31, 2023, we have ceased dispensing gasoline and diesel fuels at all locations.
The historical transportation, distribution and storage of motor fuels (diesel fuel and gasoline) and other chemicals are subject to environmental protection and operational safety laws and regulations. As of December 31, 2024, we do not dispense gasoline or diesel fuels at any locations.
An event of default would permit the lending banks under the facility to take certain actions, including terminating all outstanding commitments and declaring all amounts outstanding under our credit facility to be immediately due and payable, including all outstanding borrowings, accrued and unpaid interest thereon, and all other amounts owing or payable with respect to such borrowings and any terminated commitments.
An event of default would permit the lending banks under the facility to take certain actions, including terminating all outstanding commitments and declaring all amounts outstanding under our credit facility to be immediately due and payable, including all outstanding borrowings, accrued and unpaid interest thereon, and all other amounts owing or payable with respect to such borrowings and any terminated commitments. 10 In addition, the lenders would have the right to proceed against the collateral we granted to them, which includes substantially all of our assets.
Prolonged or pervasive economic downturns could slow the pace of new greenfield openings, reduce comparable sales or cause us to close certain locations, which could have a material negative impact on our financial performance.
Prolonged or pervasive economic downturns could slow the pace of new greenfield openings, reduce comparable sales or cause us to close certain locations, which could have a material negative impact on our financial performance. We are subject to a number of risks and regulations related to credit card and debit card payments we accept.
If we are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our retail operations and the UWC program. 9 We depend on a limited number of suppliers for most of our car wash equipment and certain supplies.
If we are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our retail operations and the UWC program.
Water service interruptions are also possible due to severe weather events, including winter storms and freezing conditions in colder climate locations, high wind conditions in areas known to experience tornados, earthquakes in areas known to experience seismic activity, high water conditions in areas located in or near designated flood plains, hurricanes, and severe electrical storms. 14 Any interruption in our ability to access water could materially and adversely affect the results of our operations and financial condition.
Water service interruptions are also possible due to severe weather events, including winter storms and freezing conditions in colder climate locations, high wind conditions in areas known to experience tornados, earthquakes in areas known to experience seismic activity, high water conditions in areas located in or near designated flood plains, hurricanes, and severe electrical storms.
Furthermore, losses from business interruptions or damage to our facilities might not be covered by our insurance policies and such losses may make it difficult for us to secure insurance coverage in the future at acceptable rates.
Any interruption in our ability to access water could materially and adversely affect the results of our operations and financial condition. Furthermore, losses from business interruptions or damage to our facilities might not be covered by our insurance policies and such losses may make it difficult for us to secure insurance coverage in the future at acceptable rates.
An increase in those fees would require us to either increase the prices we charge for our memberships, which could cause us to lose UWC Members or suffer an increase in our operating expenses, either of which could harm our operating results.
An increase in those fees would increase our operating expenses, and potentially require an offsetting increase in membership prices, which could cause us to lose UWC Members, either of which could harm our operating results.
We believe that maintaining and enhancing our reputation and brand recognition are critical to our relationships with existing customers and our ability to attract new customers. The promotion of our brand may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive.
The promotion of our brand may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive.
Reduced consumer confidence and spending cutbacks may result in reduced demand for our services, which could result in lost sales. Reduced demand also may require increased selling and promotional expenses, thereby impacting our profitability.
Furthermore, consumer purchases of car washes decline during periods when economic or market conditions are unstable or weak. Reduced consumer confidence and spending cutbacks may result in reduced demand for our services, which could result in lost sales. Reduced demand also may require increased selling and promotional expenses, thereby impacting our profitability.
Because our UWC subscription program accounted for 71% of our total wash sales in 2023, our continued business and revenue growth is largely dependent on our ability to continue to attract and retain UWC Members.
Because our UWC subscription program accounted for 74% of our total wash sales in 2024, and we estimate that the average UWC Member spends more than four times than the average retail car wash consumer, our continued business and revenue growth is largely dependent on our ability to continue to attract and retain UWC Members.
UWC Members can cancel their membership at any time and may decide to cancel or forego memberships due to any number of reasons, including increased prices for UWC membership or for our services, quality issues with our services, harm to our reputation or brand, seasonal usage, or individuals’ personal economic pressures.
UWC Members can cancel their membership at any time and may decide to cancel or forego memberships due to any number of reasons, including increased prices for UWC membership or for our services, quality issues with our services, harm to our reputation or brand, seasonal usage, or individuals’ personal economic pressures, as well as potential increasing governmental regulation of automatically renewing subscription programs, and such cancellations may contribute to a net decline, plateau, or continued slower growth plateau in UWC Members, resulting in a potential material adverse effect on revenue and our growth strategies.
Interest rate increases or other government actions taken to reduce inflation could also result in recessionary pressures. Additionally, these risks which are beyond our control, could adversely affect operating costs and administrative expenses such as wages, benefits, supplies and inventory costs, legal claims, insurance costs and borrowing costs.
Additionally, these risks which are beyond our control, could adversely affect operating costs and administrative expenses such as wages, benefits, supplies and 7 inventory costs, legal claims, insurance costs and borrowing costs. Any such increase could reduce our sales and profit margins if we do not choose, or are unable, to pass the increased costs to our customers.
Increasingly during 2021, the delivery times were extended on certain equipment for our greenfield pipeline but, through alternative sourcing, we have thus far avoided any significant disruptions. Shortages or interruptions in the supply of car wash equipment and other supplies could occur for reasons within or beyond the control of us and the supplier.
Shortages or interruptions in the supply of car wash equipment and other supplies could occur for reasons within or beyond the control of us and the supplier. Decreased fuel supplies are anticipated to increase fuel prices, which may adversely impact our transportation costs.
Removed
Domestic markets experienced significant inflationary pressures in fiscal year 2023. In addition, in fiscal year 2023 the Federal Reserve in the U.S. raised interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, had the effect of further increasing economic uncertainty and heightening these risks.
Added
We may not be able to maintain and enhance our reputation and brand recognition, which are key contributors to successful implementation of our growth strategies. We believe that maintaining and enhancing our reputation and brand recognition are critical to our relationships with existing customers and our ability to attract new customers.
Removed
Any such increase could reduce our sales and profit margins if we do not choose, or are unable, to pass the increased costs to our customers. Furthermore, consumer purchases of car washes decline during periods when economic or market conditions are unstable or weak.
Added
Global economic conditions, including inflation and supply chain disruptions, and other increased operating costs could adversely affect our operations.
Removed
We may not be successful, however, in continuing to grow the number of UWC Members on a net basis from period to period and our membership levels may decline.
Added
Domestic markets experienced significant inflationary pressures in fiscal year 2024. The U.S. Federal Reserve's approach to interest rates or other government actions taken to reduce inflation could also result in recessionary pressures.
Removed
Increasing governmental regulation of automatically renewing subscription programs may negatively impact our marketing of this program. A decline in the number of UWC Members could materially and adversely affect our business, results of operations and financial condition.
Added
We depend on a limited number of suppliers for most of our car wash equipment and certain supplies. We rely on a limited number of suppliers for most of the car wash equipment and certain other supplies we use in our operations.
Removed
In recent months, we have anticipated intermittent shortages of certain supplies from our standard vendors and, accordingly, we enhanced our sourcing procedures to identify alternative suppliers and avoid any actual shortages, albeit sometimes at additional cost.
Added
We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, which is expensive and could exceed applicable insurance coverage, could cause a diversion of resources and may not prove successful.
Removed
In addition, the lenders would have the right to proceed against the collateral we granted to them, which includes substantially our assets.
Added
Our amended and restated certificate of incorporation could prevent us from benefiting from corporate opportunities that might otherwise have been available to us.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+2 added−0 removed6 unchanged
Biggest changeManagement provides periodic reports to the Audit Committee regarding cybersecurity and other information technology risks, as well as our plans to mitigate cybersecurity risks and to respond to any breaches. 19
Biggest changeManagement provides periodic reports to the Audit Committee regarding cybersecurity and other information technology risks, as well as our plans to mitigate cybersecurity risks and to respond to any breaches, and to the Nominating and Corporate Governance Committee regarding governance matters related to cybersecurity and other information technology risks. 18
While the full Board has overall responsibility for risk oversight, it is supported in this function primarily by its committees. The Audit Committee is responsible for reviewing and discussing our policies with respect to risk assessment and risk management, including risks related to cybersecurity and other technology issues. The Board periodically evaluates our cybersecurity strategy to help ensure its effectiveness.
While the full Board has overall responsibility for risk oversight, it is supported in this function primarily by its committees. The Audit Committee is responsible for reviewing and discussing our policies with respect to risk assessment and risk management, including risks related to cybersecurity and other technology issues .
These processes include technical, administrative and physical controls and processes, as well as contractual mechanisms to mitigate risk. We also have policies and procedures to oversee and identify the cybersecurity risks associated with our use of third-party service providers, including the regular review of SOC reports, relevant cyber attestations, and other independent cyber ratings.
These processes include technical, administrative and physical controls and processes, as well as contractual mechanisms to mitigate risk. We also have policies and procedures to oversee and identify the cybersecurity risks associated with our use of third-party service providers, including the regular review of System & Organization Controls ( “SOC”) reports, relevant cyber attestations, and other independent cyber rati ngs.
Added
These processes are overseen by our Chief Technology Officer, who has over 30 years of experience consulting and leading technology teams at several global multi-unit brands, including Blockbuster, FedEx, and Yum! Brands.
Added
The Board periodically evaluates our cybersecurity strategy to help ensure its effectiveness.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeThe chart below provides a breakdown of our operating car wash locations as of December 31, 2023: State Locations Alabama 13 Arizona 18 California 55 Colorado 9 Florida 78 Georgia 22 Idaho 7 Illinois 1 Iowa 19 Maryland 2 Michigan 29 Minnesota 27 Mississippi 8 Missouri 8 New Mexico 21 Pennsylvania 6 Tennessee 16 Texas 84 Utah 23 Washington 16 Wisconsin 14 Total 476
Biggest changeThe chart below provides a breakdown of our operating car wash locations as of December 31, 2024: State Locations Alabama 13 Arizona 20 California 59 Colorado 11 Florida 83 Georgia 22 Idaho 8 Illinois 3 Iowa 19 Maryland 2 Michigan 31 Minnesota 32 Mississippi 8 Missouri 9 New Mexico 24 Pennsylvania 6 Tennessee 16 Texas 91 Utah 23 Washington 17 Wisconsin 17 Total 514
Item 2. Properties We lease 25,350 and own 27,973 square feet of office space at our corporate headquarters in Tucson, Arizona. As of December 31, 2023, we leased 419 locations and owned 55 locations. We also operate 2 locations still owned by third-party developers.
Item 2. Properties We lease 25,350 and own 27,973 square feet of office space at our corporate headquarters in Tucson, Arizona. As of December 31, 2024, we leased 459 locations and owned 55 locations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

6 edited+2 added−2 removed1 unchanged
Biggest changeMary Porter: Effective April 17, 2023, Mary Porter was named our first Chief People Officer. Ms. Porter previously served as the Vice President of Human Resources for Nordstrom from January 2018 to April 2023, supporting Nordstrom and Nordstrom Rack locations across both US and Canada, a position she achieved as the culmination of a 27-year long journey with the company.
Biggest changePorter previously served as the Vice President of Human Resources for Nordstrom from January 2018 to April 2023, supporting Nordstrom and Nordstrom Rack locations across both US and Canada, a position she achieved as the culmination of a 27-year long journey with the company. From HR compliance to Talent Acquisition to strategic business support, Ms.
Lai received a B.S. from the University of Arizona. Jed Gold: Mr. Gold has served as our Treasurer and Chief Financial Officer since July 2019. Mr. Gold previously served as Senior Director Finance, Assistant Treasurer at Yum Brands, Inc. from May 2016 to July 2019, and as Chief Financial Officer MENAPak at KFC Corporation from October 2014 to May 2016.
Lai received a B.S. from the University of Arizona. Jedidiah Gold: Mr. Gold has served as our Treasurer and Chief Financial Officer since July 2019. Mr. Gold previously served as Senior Director Finance, Assistant Treasurer at Yum! Brands, Inc. from May 2016 to July 2019, and as Chief Financial Officer MENAPak at KFC Corporation from October 2014 to May 2016.
From HR compliance to Talent Acquisition to strategic business support, Ms. Porter has experience across many Human Resources functions. Ms. Porter earned a Bachelor of Arts from the University of Washington. Joseph Matheny: Effective October 13, 2023, Joseph Matheny was appointed Chief Innovation Officer of the Company. Mr. Matheny had served as our Senior Vice President, Operations since March 2020.
Porter has experience across many Human Resources functions. Ms. Porter earned a Bachelor of Arts from the University of Washington. Joseph Matheny: Effective October 13, 2023, Joseph Matheny was appointed Chief Innovation Officer of the Company. Mr. Matheny had served as our Senior Vice President, Operations since March 2020. Mr.
Mine Safety Disclosures Not applicable. 20 Information About Our Executive Officers Our executive officers as of February 23, 2024, are as follows: Name Age Officer Since Position John Lai 60 2013 Chairman, President and Chief Executive Officer Jedidiah Gold 44 2019 Chief Financial Officer Mayra Chimienti 40 2022 Chief Operating Officer Markus Hartmann 60 2022 General Counsel Mary Porter 53 2023 Chief People Officer Joseph Matheny 48 2023 Chief Innovation Officer John Lai: Mr.
Mine Safety Disclosures Not applicable. 19 Information About Our Executive Officers Our executive officers as of February 21, 2025, are as follows: Name Age Officer Since Position John Lai 61 2013 Chairman, President and Chief Executive Officer Jedidiah Gold 45 2019 Chief Financial Officer Mary Porter 54 2023 Chief People Officer Joseph Matheny 49 2023 Chief Innovation Officer Carlos Chavez 54 2025 Chief Technology Officer John Lai: Mr.
Mr. Matheny previously served as our Vice President, Operations from December 2016 to March 2020, and served as our General Manager, Regional Manager, and Division Manager since 1998. 21 PART II
Matheny previously served as our Vice President, Operations from December 2016 to March 2020, and served in General Manager, Regional Manager, and Division Manager roles since 1998. Carlos Chavez: Effective January 20, 2025, Carlos Chavez was named our first Chief Technology Officer. Mr.
Mr. Gold received an M.B.A. in Finance and Accounting from Indiana University and a B.S. in accounting from the University of Utah. Mayra Chimienti: Effective March 14, 2022, Mayra Chimienti was appointed Chief Operating Officer of the Company. Ms. Chimienti had served as our Vice President, Operations Services since July 2017. Ms.
Mr. Gold received an M.B.A. in Finance and Accounting from Indiana University and a B.S. in Accounting from the University of Utah. Mary Porter: Effective April 17, 2023, Mary Porter was named our first Chief People Officer. Ms.
Removed
Chimienti joined the Company in 2007 and previously served as Director of Training & Development from March 2013 to July 2017. Markus Hartmann: Effective October 28, 2022, Markus Hartmann was named General Counsel and leads our legal function in ethics and compliance, intellectual property and other general corporate legal matters. Mr.
Added
Chavez previously served as the Executive Vice President and Chief Digital Officer for Les Schwab Tire Centers from August 2017 to January 2025, leading the digital transformation and creating business intelligence capabilities. Mr. Chavez has over 30 years of experience consulting and leading technology teams at several global multi-unit brands, including Blockbuster, FedEx, and Yum! Brands. Mr.
Removed
Hartmann brings over 25 years of experience advising companies on wide-ranging critical corporate initiatives, legal and compliance related activities. He began his career as an associate attorney with the law firm Hale & Dorr LLP (now WilmerHale) and is a retired Colonel in the Marine Corp Reserve.
Added
Chavez holds a B.B.A in Management Information Systems and a M.B.A from the University of Texas at Austin. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−1 removed1 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has traded on The New York Stock Exchange (“NYSE”), under the symbol “MCW” since our initial public offering in June 2021. Prior to that time, there was no public market for our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Effective January 1, 2025, our common stock was listed and began trading on Nasdaq's Global Select Market under the ticker symbol “MCW”.
The graph assumes that the value of the investment in our stock and in each index was $100 at June 25, 2021, and that all dividends were reinvested. 6/25/21 12/31/21 12/31/22 12/31/23 Mister Car Wash, Inc. $ 100.00 $ 90.00 $ 45.00 $ 43.00 S&P 1500 Consumer Services $ 100.00 $ 105.00 $ 90.00 $ 115.00 S&P 500 Total Return $ 100.00 $ 112.00 $ 92.00 $ 116.00 Russell 2000 $ 100.00 $ 97.00 $ 76.96 $ 89.99 22 Item 6. [Reserved] 23
The graph assumes that the value of the investment in our stock and in each index was $100 at June 25, 2021, and that all dividends were reinvested. 6/25/21 12/31/21 12/31/22 12/31/23 12/31/24 Mister Car Wash, Inc. $ 100.00 $ 90.00 $ 45.00 $ 43.00 $ 36.00 S&P 1500 Consumer Services $ 100.00 $ 105.00 $ 90.00 $ 115.00 $ 134.00 S&P 500 Total Return $ 100.00 $ 112.00 $ 92.00 $ 116.00 $ 145.00 Russell 2000 $ 100.00 $ 97.00 $ 76.96 $ 89.99 $ 100.37 Item 6. [Reserved] 21
Stock Performance Graph The following graph compares the cumulative stockholder return since June 25, 2021, the date our common stock began trading on NYSE with S&P 1500 Consumer Services Index, S&P 500 Total Return Index, and Russell 2000 Index.
Stock Performance Graph The following graph compares the cumulative stockholder return since June 25, 2021, the date our common stock began trading on a national stock exchange with S&P 1500 Consumer Services Index, S&P 500 Total Return Index, and Russell 2000 Index.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, we did not repurchase any equity securities that were not registered under the Securities Act.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2024, we did not repurchase any equity securities.
Dividend Policy We currently intend to retain any future earnings to fund the development and expansion of our business, and, therefore, we do not anticipate paying cash dividends on our share capital in the foreseeable future.
This number excludes stockholders whose stock is held in street name by banks, brokers and other nominees. Dividend Policy We currently intend to retain any future earnings to fund the development and expansion of our business, and, therefore, we do not anticipate paying cash dividends on our share capital in the foreseeable future.
Removed
Holders of Record As of February 15, 2024, there were 1,342 holders of record of our common stock. This number excludes stockholders whose stock is held in street name by banks, brokers and other nominees.
Added
From June 25, 2021 through December 31, 2024, our common stock was listed on the New York Stock Exchange under the symbol “MCW”. Prior to June 2021, there was no public trading market for our common stock . Holders of Record As of February 13, 2025, there were 1,282 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+6 added−15 removed34 unchanged
Biggest changeYear Ended December 31, 2023 2022 (Dollars in thousands) Amount % of Revenue Amount % of Revenue Net revenues $ 927,070 100 % $ 876,506 100 % Store operating costs: Cost of labor and chemicals 279,375 30 % 268,467 31 % Other store operating expenses 363,717 39 % 322,414 37 % General and administrative 105,708 11 % 98,855 11 % (Gain) loss on sale of assets, net 125 0 % (949 ) (0 )% Total costs and expenses 748,925 81 % 688,787 79 % Operating income 178,145 19 % 187,719 21 % Other expense: Interest expense, net 75,104 8 % 41,895 5 % Total other expense 75,104 8 % 41,895 5 % Income before taxes 103,041 11 % 145,824 17 % Income tax provision 22,911 2 % 32,924 4 % Net income $ 80,130 9 % $ 112,900 13 % Net Revenues Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Net revenues $ 927,070 $ 876,506 $ 50,564 6 % The increase in net revenues was primarily attributable to the increase in car wash sales due to growth in UWC Members and the year-over-year addition of 40 net locations.
Biggest changeYear Ended December 31, 2024 2023 (Dollars in thousands) Amount % of Revenue Amount % of Revenue Net revenues $ 994,727 100 % $ 927,070 100 % Costs and expenses: Cost of labor and chemicals 290,705 29 % 279,375 30 % Other store operating expenses 404,675 41 % 363,717 39 % General and administrative 107,980 11 % 105,708 11 % Loss on sale of assets, net 12,435 1 % 125 0 % Total costs and expenses 815,795 82 % 748,925 81 % Operating income 178,932 18 % 178,145 19 % Other (income) expense: Interest expense, net 79,488 8 % 75,104 8 % Loss on extinguishment of debt 1,976 0 % — 0 % Other income (5,199 ) (1 )% — 0 % Total other expense, net 76,265 8 % 75,104 8 % Income before taxes 102,667 10 % 103,041 11 % Income tax provision 32,428 3 % 22,911 2 % Net income $ 70,239 7 % $ 80,130 9 % Net Revenues Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Net revenues $ 994,727 $ 927,070 $ 67,657 7 % The increase in net revenues was primarily attributable to growth in UWC Members, the year-over-year addition of 38 net locations, as well as price optimization and wash package mix with the introduction of our new premium Titanium wash package, which expanded our wash packages offered to UWC Members and Retail customers.
Some of these limitations include: • Adjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments; 26 • Adjusted EBITDA does not reflect changes in our cash requirements for our working capital needs; • Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt; • Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized; • Adjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation; • Adjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters we do not find indicative of our ongoing operations; and • other companies in our industry may calculate Adjusted EBITDA differently than we do.
Some of these limitations include: • Adjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA does not reflect changes in our cash requirements for our working capital needs; • Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt; • Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized; • Adjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation; • Adjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters we do not find indicative of our ongoing operations; and • other companies in our industry may calculate Adjusted EBITDA differently than we do.
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 pose risks and challenges, including those discussed below and in Part I, Item 1A. "Risk Factors" included elsewhere in this Annual Report on Form 10-K. • Growth in comparable store sales.
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 pose risks and challenges, including those discussed below and in Part I, Item 1A. “ Risk Factors ” included elsewhere in this Annual Report on Form 10-K. • Growth in comparable store sales.
Forfeiture estimates are revised if subsequent information indicates that the actual number of forfeitures is likely to differ from previous estimates. We record deferred tax assets for awards that result in deductions in our income tax returns, based upon the amount of compensation cost recognized and our statutory tax rate.
Forfeiture estimates are revised if subsequent information indicates that the actual number of forfeitures is likely to differ from previous estimates. 30 We record deferred tax assets for awards that result in deductions in our income tax returns, based upon the amount of compensation cost recognized and our statutory tax rate.
Net cash used in operating activities consists of net income (loss) adjusted for certain non-cash items, including stock-based compensation expense, depreciation of property and equipment, amortization of leased assets and deferred income taxes, as well as (gain) losses on disposal of property and equipment and the effect of changes in other working capital amounts.
Net cash used in operating activities consists of net income adjusted for certain non-cash items, including stock-based compensation expense, depreciation of property and equipment, amortization of leased assets and deferred income taxes, as well as (gain) losses on disposal of property and equipment and the effect of changes in other working capital amounts.
For the year ended December 31, 2023, net cash used in investing activities was $259.4 million and was primarily comprised of purchases in property and equipment to support our greenfield and other initiatives, and the acquisition of car washes, partially offset by sale-leaseback transactions and the sale of property and equipment.
For the year ended December 31, 2023, net cash used in investing activities was $259.4 million and was primarily comprised of purchases in property and equipment to support our greenfield and other initiatives, and the acquisition of car washes, partially offset by sale-leaseback transactions and the sale of property and equipment. Financing Activities .
However, in determining the amount and timing of revenue from contracts with customers, we make judgments as to whether uncertainty as to collectability of the consideration that we are owed precludes recognition of the revenue on an 31 accrual basis. These judgments are based on the facts specific to each circumstance.
However, in determining the amount and timing of revenue from contracts with customers, we make judgments as to whether uncertainty as to collectability of the consideration that we are owed precludes recognition of the revenue on an accrual basis. These judgments are based on the facts specific to each circumstance.
Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We classify all deferred income tax assets and liabilities as noncurrent on our balance sheet.
Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We classify all deferred income tax assets and liabilities as noncurrent on our balance sheets.
Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” and “—Recently issued accounting pronouncements not yet adopted” in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10‑K. 33
Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” and “—Recently issued accounting pronouncements not yet adopted” in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10‑K. 31
As of December 31, 2023, we were in compliance with the covenants under our Credit Facilities and we expect to comply with our covenants in the next 12 months from the issuance date of the financial statements included in this Annual Report on Form 10-K.
As of December 31, 2024, we were in compliance with the covenants under our Credit Facilities and we expect to comply with our covenants in the next 12 months from the issuance date of the financial statements included in this Annual Report on Form 10-K.
For discussion and analysis of our financial condition and results of operations for 2021 and year-to-year comparisons between 2022 and 2021, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
For discussion and analysis of our financial condition and results of operations for 2022 and year-to-year comparisons between 2023 and 2022, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The tax effect of differences between the compensation cost of an award recognized for financial reporting purposes and the deduction for an award for tax purposes is recognized as an income tax expense or benefit in the consolidated statements of operations and comprehensive income (loss) in the period in which the tax deduction arises.
The tax effect of differences between the compensation cost of an award recognized for financial reporting purposes and the deduction for an award for tax purposes is recognized as an income tax expense or benefit in the consolidated statements of operations in the period in which the tax deduction arises.
Historically, these cash requirements have been met through funds raised by the sale of common equity, utilization of our Revolving Commitment, First Lien Term Loan, sale-leaseback transactions and cash provided by operations.
Historically, these cash requirements have been met through funds raised by the sale of our common stock, utilization of our Revolving Commitment, First Lien Term Loan, sale-leaseback transactions, and cash provided by operations.
No impairment losses associated with our goodwill were recognized during the years ended December 31, 2023, and December 31, 2022. Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes .
No impairment losses associated with our goodwill were recognized during the years ended December 31, 2024, and December 31, 2023. Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes .
If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported as impairment of goodwill in our consolidated statements of operations and comprehensive income (loss).
If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported as impairment of goodwill in our consolidated statements of operations.
During 2023, comparable store sales increased 0.3% compared to an increase of 5% in 2022. UWC Members (end of period) Members of our monthly subscription service are known as Unlimited Wash Club Members, or UWC Members.
During 2024, comparable store sales increased 3.0% compared to an increase of 0.3% in 2023. UWC Members (end of period) Members of our monthly subscription service are known as Unlimited Wash Club Members, or UWC Members.
The following includes a discussion and analysis of our financial condition and results of operations for 2023 and 2022 and year-to-year comparisons between 2023 and 2022.
The following includes a discussion and analysis of our financial condition and results of operations for 2024 and 2023 and year-to-year comparisons between 2024 and 2023.
Opening 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. 25 Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy.
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.
The increase experienced in the year ended December 31, 2023 compared to the prior year is primarily attributable to an increase in car wash sales due to growth in UWC Members and the year-over-year addition of 40 net locations, offset by an increase in operating costs and expenses.
The increase experienced in the year ended December 31, 2024 compared to the prior year is primarily attributable to an increase in car wash sales due to growth in UWC Members and the year-over-year addition of 38 net locations, offset by an increase in operating costs and expenses.
More recently, we have also grown through greenfield development of Mister Car Wash locations, with particular focus on Express Exterior Locations, and anticipate continued pursuit of this strategy in the future. During 2023, we successfully opened a total of 35 greenfield locations, with the expectation of driving the majority of our future location growth through greenfield development.
Greenfield Location Development More recently, we have grown through greenfield development of Mister Car Wash locations, with particular focus on Express Exterior Locations, and anticipate continued pursuit of this strategy in the future. During 2024, we successfully opened a total of 39 greenfield locations, with the expectation of driving the majority of our future location growth through greenfield development.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized within the provision for (benefit from) income taxes on the consolidated statement of operations and comprehensive income (loss) in the period that includes the enactment date.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized within the provision for (benefit from) income taxes on the consolidated statements of operations in the period that includes the enactment date.
This assessment relies on 32 estimates and assumptions and any changes in the recognition or measurement of these benefits or liabilities are reflected in the period in which the change in judgment occurs. We recognize interest and penalties related to uncertain tax positions within income tax provision (benefit) on our consolidated statement of operations and comprehensive income (loss).
This assessment relies on estimates and assumptions and any changes in the recognition or measurement of these benefits or liabilities are reflected in the period in which the change in judgment occurs. We recognize interest and penalties related to uncertain tax positions within income tax provision on our consolidated statements of operations.
For the year ended December 31, 2022, net cash provided by financing activities was $6.3 million and was primarily comprised of proceeds from issuance of common stock under employee plans, partially offset by payments of long-term debt and finance lease obligations. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP.
For the year ended December 31, 2023, net cash provided by financing activities was $8.6 million and was primarily comprised of proceeds from issuance of common stock under employee plans, partially offset by payments of finance lease obligations and other financing activities. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP.
(f) Consists of other items as determined by management not to be reflective of our ongoing operating performance, such as costs associated with severance pay, non-deferred legal fees and other expenses related to credit agreement amendments, legal settlements and legal fees related to contract terminations, and nonrecurring strategic project costs. 27 Results of Operations The results of operations data for the years ended December 31, 2023 and 2022 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(f) Consists of other items as determined by management not to be reflective of our ongoing operating performance, such as costs associated with severance pay, legal settlements and legal fees related to contract terminations, and nonrecurring strategic project costs. 25 Results of Operations The results of operations data for the years ended December 31, 2024 and 2023 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Stock-Based Compensation Stock-based compensation represents the cost related to stock-based awards granted to employees. We measure stock-based compensation cost at grant date, based upon the estimated fair value of the award, and recognize cost as expense using the accelerate attribution method over the employee requisite service period.
Stock-Based Compensation Stock-based compensation represents the cost related to stock-based awards granted to employees. We measure stock-based compensation cost at grant date, based upon the estimated fair value of the award, and recognize cost as expense using the accelerate attribution method over the employee requisite service period. We estimate the fair value of stock options using Black-Scholes option model.
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. 24 Business Acquisitions In 2023, we completed two business acquisitions of six properties.
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.
Our Adjusted EBITDA was approximately $285.9 million and $281.6 million for the years ended December 31, 2023 and 2022, respectively. Our Adjusted EBITDA margin was 31% and 32% for the years ended December 31, 2023 and 2022, respectively.
Our Adjusted EBITDA was approximately $320.9 million and $285.9 million for the years ended December 31, 2024 and 2023, respectively. Our Adjusted EBITDA margin was 32% and 31% for the years ended December 31, 2024 and 2023, respectively.
Hiring and retaining skilled team members and experienced management represents one of our largest costs. 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.
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.
Refer to Note 8 Income Taxes in our consolidated financial statements and for additional information on the composition of these valuation allowances and for information on the impact of U.S. tax reform legislation.
Refer to Note 8 Income Taxes in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on the composition of these valuation allowances and for information on the impact of U.S. tax reform legislation.
We estimate the fair value of stock options using Black-Scholes and Monte Carlo option models. We estimate the fair value of stock purchase rights using a Black-Scholes option-pricing model. Restricted stock units are classified as equity and measured at the fair market value of the underlying stock at the grant date.
We estimate the fair value of stock purchase rights using a Black-Scholes option-pricing model. Restricted stock units are classified as equity and measured at the fair market value of the underlying stock at the grant date. Upon termination unvested time and performance-based options, stock-purchase rights, and restricted stock units are forfeited.
UWC Sales as a Percentage of Total Wash Sales UWC sales as a percentage of total wash sales represent 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.
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.
(c) Represents expenses incurred in strategic acquisitions, including professional fees for accounting and auditing services, appraisals, legal fees and financial services, one-time costs associated with supplies for rebranding the acquired stores, and distinct travel expenses for related, distinct integration efforts by team members who are not part of our dedicated integration team, as well as expenses associated with greenfield construction.
Expenses include professional fees for accounting and auditing services, appraisals, legal fees and financial services, dead deal costs, one-time costs associated with supplies for rebranding the acquired stores, and distinct travel expenses for related, distinct integration efforts by team members who are not part of our dedicated integration team.
Cash Flows for the Years Ended December 31, 2023 and 2022 The following table shows summary cash flow information for the periods presented: Year Ended December 31, (Dollars in thousands) 2023 2022 Net cash provided by operating activities $ 204,653 $ 229,201 Net cash used in investing activities (259,365 ) (190,131 ) Net cash provided by financing activities 8,609 6,294 Net change in cash and cash equivalents, and restricted cash during period $ (46,103 ) $ 45,364 Operating Activities .
Cash Flows for the Years Ended December 31, 2024 and 2023 The following table shows summary cash flow information for the periods presented: Year Ended December 31, (Dollars in thousands) 2024 2023 Net cash provided by operating activities $ 248,620 $ 204,653 Net cash used in investing activities (199,852 ) (259,365 ) Net cash provided by (used in) financing activities (275 ) 8,609 Net change in cash and cash equivalents, and restricted cash during period $ 48,493 $ (46,103 ) Operating Activities .
Adjusted EBITDA and Adjusted EBITDA Margin 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").
UWC sales were 74% and 71% of our total wash sales for the years ended December 31, 2024, and 2023, respectively. 23 Adjusted EBITDA and Adjusted EBITDA Margin 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.
Changes in working capital decreased cash provided by operating activities by $34.5 million, primarily due to $40.4 million of payments towards operating lease liabilities, partially offset by an increase of $6.1 million in accrued expenses.
Changes in working capital decreased cash provided by operating activities by $34.5 million, primarily due to $40.4 million of payments towards operating lease liabilities, partially offset by an increase of $6.1 million in accrued expenses. Investing Activities . Our net cash used in investing activities primarily consists of purchases and sale of property and equipment and acquisition of car washes.
For the year ended December 31, 2022, net cash used in investing activities was $190.1 million and was primarily comprised of purchases in property and equipment to support our greenfield and other initiatives, and the acquisition of car washes, partially offset by sale-leaseback transactions and the sale of property and equipment. Financing Activities .
For the year ended December 31, 2024, net cash used in investing activities was $199.9 million and was primarily comprised of purchases in property and equipment to support our greenfield development, partially offset by sale-leaseback transactions and the sale of property and equipment.
Upon termination unvested time and performance-based options, stock-purchase rights, and restricted stock units are forfeited. We have made a policy election to estimate the number of stock-based compensation awards that are expected to vest to determine the amount of compensation expense recognized in earnings.
We have made a policy election to estimate the number of stock-based compensation awards that are expected to vest to determine the amount of compensation expense recognized in earnings.
Year Ended December 31, (Dollars in thousands) 2023 2022 Financial and Operating Data Location count (end of period) 476 436 Comparable store sales growth 0.3 % 5 % UWC Members (in thousands, end of period) 2,077 1,884 UWC sales as a percentage of total wash sales 71 % 68 % Net income (loss) $ 80,130 $ 112,900 Net income (loss) margin 8.6 % 12.9 % Adjusted EBITDA $ 285,924 $ 281,646 Adjusted EBITDA margin 30.8 % 32.1 % Location Count (end of period) Our location count refers to the total number of car wash locations operating at the end of a period, inclusive of new greenfield locations, acquired locations and offset by closed locations.
The key operating performance and financial metrics and indicators we use are set forth below, as of and for the years ended December 31, 2024 and 2023. 22 Year Ended December 31, (Dollars in thousands) 2024 2023 Financial and Operating Data: Location count (end of period) 514 476 Comparable store sales growth 3.0 % 0.3 % UWC Members (in thousands, end of period) 2,124 2,077 UWC sales as a percentage of total wash sales 74 % 71 % Net income $ 70,239 $ 80,130 Net income margin 7.1 % 8.6 % Adjusted EBITDA $ 320,946 $ 285,924 Adjusted EBITDA margin 32.3 % 30.8 % Location Count (end of period) Our location count refers to the total number of car wash locations operating at the end of a period, inclusive of new greenfield locations, acquired locations and offset by closed locations.
No impairment losses associated with our long-lived assets were recognized during the year ended December 31, 2023. Approximately $6.3 million of impairment losses associated with our long-lived assets were recognized for the year ended December 31, 2022. See Note 4 for additional information.
Approximately $1.5 million of impairment losses associated with our long-lived assets were recognized during the year ended December 31, 2024. No impairment losses associated with our long-lived assets were recognized during the year ended December 31, 2023.
(b) Represents non-cash expense associated with our share-based payments as well as related taxes.
(b) Represents non-cash expense associated with our share-based payments as well as related taxes. (c) Represents expenses incurred in strategic acquisitions and greenfield development.
Goodwill Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level annually on October 31 or more frequently if events or changes in circumstances indicate that the asset may be impaired.
Goodwill is tested for impairment at the reporting unit level annually on October 31 or more frequently if events or changes in circumstances indicate that the asset may be impaired.
Comparable Store Sales Growth A location is considered a comparable store on the first day of the 13th full calendar month following a location’s first day of operations.
Comparable Store Sales Growth 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.
UWC sales as a percentage of total wash sales is calculated as sales generated from UWC Members as a percentage of total wash sales. We have consistently grown this measure over time as we educate customers as to the value of our subscription offering.
We have consistently grown this measure over time as we educate customers as to the value of our subscription offering.
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.
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.
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 years ended December 31, 2023 and 2022.
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.
Year Ended December 31, (Dollars in thousands) 2023 2022 Reconciliation of net income (loss) to Adjusted EBITDA: Net income (loss) $ 80,130 $ 112,900 Interest expense, net 75,104 41,895 Income tax provision 22,911 32,924 Depreciation and amortization expense 69,991 61,580 (Gain) loss on sale of assets, net (a) 125 (949 ) Stock-based compensation expense (b) 24,310 22,305 Acquisition expenses (c) 3,471 3,648 Non-cash rent expense (d) 5,043 2,792 Expenses associated with initial public offering (e) — 272 Other (f) 4,839 4,279 Adjusted EBITDA $ 285,924 $ 281,646 Net revenues $ 927,070 $ 876,506 Adjusted EBITDA margin 30.8 % 32.1 % (a) Consists of (gains) and losses on the disposition of assets associated with sale leaseback transactions, store closures or the sale of property and equipment.
The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented. 24 Year Ended December 31, (Dollars in thousands) 2024 2023 Reconciliation of net income to adjusted EBITDA: Net income $ 70,239 $ 80,130 Interest expense, net 79,488 75,104 Income tax provision 32,428 22,911 Depreciation and amortization expense 81,366 69,991 Loss on sale of assets, net (a) 12,435 125 Stock-based compensation expense (b) 27,259 24,310 Acquisition expenses (c) 3,357 3,471 Non-cash rent expense (d) 6,405 5,043 Debt refinancing costs (e) 6,711 — Employee retention credit (5,189 ) — Other (f) 6,447 4,839 Adjusted EBITDA $ 320,946 $ 285,924 Net revenues $ 994,727 $ 927,070 Net income margin 7.1 % 8.6 % Adjusted EBITDA margin 32.3 % 30.8 % (a) Consists of (gains) and losses on the disposition of assets associated with sale leaseback transactions, the sale of property and equipment, and store closures or the impairments associated with store closures and relocations.
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 fiscal year 2023, we increased our location count by 40 net locations, including 35 greenfield locations and six business acquisition locations, offset by one location that was closed.
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.
GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and because our Amended First Lien Credit Agreement (as defined below) uses measures similar to Adjusted EBITDA to measure our compliance with certain covenants. • 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 measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and because our Amended First Lien Credit Agreement uses measures similar to Adjusted EBITDA to measure our compliance with certain covenants.
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 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.
In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
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.
Adjusted EBITDA is defined as net income (loss) before interest expense, net, income tax provision (benefit), depreciation and amortization expense, (gain) loss on sale of assets, loss on extinguishment of debt, stock-based compensation expense, acquisition expenses, management fees, non-cash rent expense, expenses associated with the completion of our initial public offering in June 2021 ("the IPO"), expenses associated with the secondary public offering, and other nonrecurring charges.
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.
(Gain) Loss on Sale of Assets, net Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change (Gain) loss on sale of assets, net $ 125 $ (949 ) $ 1,074 (113 )% Percentage of net revenues 0 % (0 )% The (gain) loss on sale of assets, net in 2023 was primarily driven by losses associated with our sale-leaseback transactions.
Loss on Sale of Assets, net Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Loss on sale of assets, net $ 12,435 $ 125 $ 12,310 9,848 % Percentage of net revenues 1 % 0 % The change in loss on sale of assets, net in 2024 was primarily attributable to more significant net losses associated with our sale-leaseback activity in the current year and impairments associated with store closures and relocations.
For the year ended December 31, 2023, net cash provided by financing activities was $8.6 million and was primarily comprised of proceeds from issuance of common stock under employee plans, partially offset by payments of finance lease obligations and other financing activities.
Our net cash provided by (used in) financing activities primarily consists of activity related to our debt, proceeds from issuance of common stock under employee plans and payments on finance lease obligations. 28 For the year ended December 31, 2024, net cash used in financing activities was $0.3 million and was primarily comprised of activities related to our debt and debt refinancings, as well as payments for payroll tax withholdings to settle cashless stock option exercises and proceeds related to the issuance of common stock under employee plans.
For a description of our Credit Facilities, please see Note 9 Debt in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2024 and 2023, we had cash and cash equivalents of $67.5 million and $19.0 million, respectively, and $299.8 million and $149.2 million, respectively, of available borrowing capacity under our Revolving Commitment. 27 For a description of our Credit Facilities, please see Note 9 Debt in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Store Operating Costs Cost of Labor and Chemicals Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Cost of labor and chemicals $ 279,375 $ 268,467 $ 10,908 4 % Percentage of net revenues 30 % 31 % The increase in the cost of labor and chemicals is primarily driven by an increase in labor and benefits of approximately $9.1 million and an increase in wash chemicals and supplies of approximately $1.8 million during the year ended December 31, 2023, both attributable to an increase in volume and the year-over-year addition of 40 net locations, as well as some inflationary pressures on both our labor and chemicals.
Cost of Labor and Chemicals Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Cost of labor and chemicals $ 290,705 $ 279,375 $ 11,330 4 % Percentage of net revenues 29 % 30 % The increase in the cost of labor and chemicals was primarily attributable to an increase in volume and the year-over-year addition of 38 net locations, as well as some inflationary pressures on store labor, partially offset by labor optimization and lower chemical costs due to new formulations and cost savings from strategic partnerships between periods.
Changes in working capital decreased cash provided by operating activities by $38.5 million, primarily due to $42.7 million of payments towards operating lease liabilities and a decrease in prepaid expenses and other current assets of $4.3 million.
Changes in working capital decreased cash provided by operating activities by $24.2 million, primarily due to payments towards operating lease liabilities, partially offset by the timing of payments and receipts of receivables and payables.
UWC Members contribute a significant portion of our net revenue and provide recurring revenue through their monthly membership fees. 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. • Labor management.
UWC Members contribute a significant 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 costs.
(d) Represents the difference between cash paid for rent expense and U.S. GAAP rent expense. (e) Represents nonrecurring expenses associated with the consummation of our initial public offering in June 2021.
(d) Represents the difference between cash paid for rent expense and U.S. GAAP rent expense. (e) Represents non-deferred legal fees and other expenses related to credit agreement amendments, and loss on extinguishment of debt associated with amendments to the debt facilities.
As a percentage of net revenues, costs of labor and chemicals for the year ended December 31, 2023 decreased by 1% due to improved labor staffing and volume mix as compared to the prior year period. 28 Other Store Operating Expenses Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Other store operating expenses $ 363,717 $ 322,414 $ 41,303 13 % Percentage of net revenues 39 % 37 % The increase in other store operating expenses was primarily attributable to the year-over-year addition of 40 net locations.
Other Store Operating Expenses Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Other store operating expenses $ 404,675 $ 363,717 $ 40,958 11 % Percentage of net revenues 41 % 39 % 26 The increase in other store operating expenses was primarily attributable to the year-over-year addition of 38 net locations, as well as additional rent expense related to our sale-leaseback activity in the current year.
General and Administrative Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change General and administrative $ 105,708 $ 98,855 $ 6,853 7 % Percentage of net revenues 11 % 11 % The increase in general and administrative expenses was primarily driven by an increase of approximately $3.2 million in salaries and benefits, an increase of approximately $1.4 million in stock-based compensation expense and related taxes, an increase of $1.8 million in marketing expenses and an increase of approximately $0.5 million in other corporate-related costs.
General and Administrative Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change General and administrative $ 107,980 $ 105,708 $ 2,272 2 % Percentage of net revenues 11 % 11 % The increase in general and administrative expenses was primarily attributable to the debt refinancing costs in the current year, partially offset by decreases in travel and other expenses.
Income Tax Provision Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Income tax provision $ 22,911 $ 32,924 $ (10,013 ) (30 )% Percentage of net revenues 2 % 4 % The decrease in income tax provision in 2023 was primarily due to our income before taxes generated during the current year, which was lower than in 2022. 29 Liquidity and Capital Resources Funding Requirements Our primary requirements for liquidity and capital are to fund our investments in our core business, which includes lease payments, pursue greenfield expansion, acquisitions of new locations and to service our indebtedness.
Liquidity and Capital Resources Funding Requirements Our primary requirements for liquidity and capital are to fund our investments in our core business, which includes lease payments, pursue greenfield location development, acquisitions of new locations and to service our indebtedness.
For the year ended December 31, 2022, net cash provided by operating activities was $229.2 million and was comprised of net income of $112.9 million, increased by $154.8 million related to non-cash adjustments, which includes $22.3 million for stock-based compensation expense. Other non-cash adjustments included depreciation and amortization, non-cash interest income and deferred income tax.
For the year ended December 31, 2024, net cash provided by operating activities was $248.6 million and was comprised of net income of $70.2 million, increased by $202.5 million primarily as a result of non-cash adjustments including depreciation and amortization expense, non-cash lease expense, deferred income taxes, loss on sale of assets, net, and loss on extinguishment of debt.
There were approximately 2.1 million and approximately 1.9 million UWC Members as of December 31, 2023 and 2022, respectively. Our UWC program grew by approximately 0.2 million UWC Members, or approximately 10.2%, from December 31, 2022 to December 31, 2023.
There were approximately 2.1 million UWC Members as of December 31, 2024 an increase of approximately 2%, from December 31, 2023. UWC Sales as a Percentage of Total Wash Sales UWC sales as a percentage of total wash sales represent the penetration of our subscription membership program as a percentage of our overall wash sales.
Other Expense Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Other expense $ 75,104 $ 41,895 $ 33,209 79 % Percentage of net revenues 8 % 5 % The increase in other expense was primarily driven by an increase in interest expense due to higher average interest rates and the expiration of our interest rate swap in October 2022, as compared to the prior year period .
Total Other Expense, net Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Total other expense, net $ 76,265 $ 75,104 $ 1,161 2 % Percentage of net revenues 8 % 8 % The increase in total other expense, net was primarily attributable to increased interest expense and loss on extinguishment of debt related to our debt refinancing activity in the current year, partially offset by a gain related to the recognition of an employee retention credit .
In fiscal year 2022, we increased our location count by 40 locations, including 28 greenfield locations and 12 business acquisition locations. One location, which was part of a 2021 acquisition, opened during the second quarter of 2022 and is included as an acquired location above.
In fiscal year 2024, we increased our location count by 38 net new locations, including 39 greenfield locations and one location that was relocated, offset by two locations that were closed. In fiscal year 2023, we increased our location count by 40 net locations, including 35 greenfield locations and six business acquisition locations, offset by one location that was closed.
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Greenfield Location Development A part of our historical growth strategy has involved acquiring local and regional car wash operators, upgrading the facilities and equipment, training the team to provide the “Mister Experience” and converting the site to the “Mister” brand.
Added
Our Express Exterior Locations, which offer express exterior cleaning services, comprise 450 of our current locations and our Interior Cleaning Locations, which offer both express exterior cleaning services and interior cleaning services, comprise 64 of our current locations.
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Following acquisition, we implement a variety of operational improvements to unify branding and enhance profitability.
Added
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.
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As soon as feasible, we fully integrate and transition acquired locations to the “Mister” brand and make investments to improve site flow, upgrade tunnel equipment and technology, and install our proprietary Unity Chemical system, which is a unique blend of our signature products utilizing the newest technology and services to make a better car wash experience for our customers.
Added
Locations opened during 2024 accounted for $8.0 million of the increase.
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We also establish member-only lanes, optimize service offerings and implement training initiatives that we have successfully utilized to improve team member engagement and drive UWC growth post-acquisition. The costs associated with these onboarding initiatives, which vary by site, can impact the comparability of our results.
Added
Locations opened during 2024 accounted for $15.3 million of the increase.
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The comparability of our results may also be impacted by the inclusion of financial performance of our acquisitions that have not delivered a full fiscal year of financial results under Mister Car Wash’s ownership. Divestitures During the years ended December 31, 2023 and 2022, we did not consummate any significant divestitures.
Added
Income Tax Provision Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Income tax provision $ 32,428 $ 22,911 $ 9,517 42 % Percentage of net revenues 3 % 2 % The increase in income tax provision was primarily attributable to the net, unfavorable income tax impact from equity awards activity in the current year.
Removed
UWC sales were 71% and 68% of our total wash sales for the years ended December 31, 2023, and 2022, respectively.
Added
See Note 4 Property and Equipment, net in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 29 Goodwill Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.
Removed
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.
Removed
The following is a reconciliation of our net income (loss) to Adjusted EBITDA for the periods presented.
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Utilities and maintenance expenses increased approximately $14.7 million, depreciation expense increased approximately $8.6 million and rent expense increased approximately $14.5 million with the addition of 47 new land and building leases.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023 and 2022, we had $901.2 million of variable-rate debt outstanding under our First Lien Term Loan.
Biggest changeAs of December 31, 2024, we had $920.4 million of variable-rate debt outstanding under our First Lien Term Loan.
Based on the balance outstanding under our First Lien Term Loan as of December 31, 2023, an increase or decrease of 100 basis points in the effective interest rate on the First Lien Term Loan would cause an increase or decrease in interest expense of approximately $9 million over the next 12 months.
Based on the balance outstanding under our First Lien Term Loan as of December 31, 2024, an increase or decrease of 100 basis points in the effective interest rate on the First Lien Term Loan would cause an increase or decrease in interest expense of approximately $9 million over the next 12 months. 32
Removed
Impact of Inflation Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have recently experienced the effects of inflation on our results of operations and financial condition.
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In light of the current inflationary market conditions, we cannot assure you that our results of operations and financial condition will not be materially impacted by inflation in the future. 34

Other MCW 10-K year-over-year comparisons