Executive Summary

Record quarter: net revenues $255.0M (+8% YoY), adjusted EBITDA $88.7M (+20% YoY), adjusted EBITDA margin ~34.8% (+360 bps YoY) driven by premiumization (Titanium adoption) and tight expense control .
Comparable-store sales +2.4% with UWC sales at 72% of total wash sales; UWC members ~2.1M with +15k net adds in Q2, and average Express revenue per member rose to $28.14 as promotions rolled off .
Guidance reiterated for FY2024; management now expects revenue at the low end, comps around the midpoint, and adjusted EBITDA at the high end of the range; margins to moderate to low-30% adjusted EBITDA margin in H2 due to timing of investments and merit increases .
Near-term stock narrative catalysts: visible premiumization tailwind (60% premium mix, Titanium at ~20% fully paid), targeted marketing/reactivation of ~800k lapsed members, and expected easing competitive intrusion; offset by retail softness and greenfield timing delays; Houston hurricane introduces short-term comp noise .

What Went Well and What Went Wrong

What Went Well

“We delivered record revenue and adjusted EBITDA in the second quarter… resulted in a 20% increase in adjusted EBITDA to $88.7 million for the quarter.” — John Lai, CEO .
Premiumization: Titanium reached ~20% of members, largely off promotion, lifting revenue per member by $2.27; average Express RPM $28.14 vs. $25.87 last year .
Expense discipline: adjusted EBITDA margin expanded 360 bps to nearly 35% on efficiencies in labor, chemicals, G&A, with further site-specific premium penetration opportunities .

What Went Wrong

Retail softness persisted: retail sales were down low double digits YoY, though better than Q1; retail transactions below expectations despite higher average ticket ($14.88, +5.2% YoY) .
Greenfield delays: timing of some openings shifted to later 2024/early 2025, pressuring total revenue vs earlier expectations (though paybacks still ~3 years) .
Rising rent: continued sale-leasebacks and lease growth drove net rent expense higher (Q2 net rent ~$27.1M; cash rent +14% YoY), compressing “other store operating expenses” mix .

Financial Results

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Net Revenues ($USD Millions)	$236.9	$230.1	$239.2	$255.0
Diluted EPS (GAAP, $USD)	$0.08	$0.04	$0.05	$0.07
Adjusted EPS (Non-GAAP, $USD)	$0.09	$0.07	$0.08	$0.11
Adjusted EBITDA ($USD Millions)	$73.9	$69.5	$75.2	$88.7
Adjusted EBITDA Margin % (calc)	31.2%	30.2%	31.4%	34.8%

Notes: Adjusted EBITDA margin is computed from adjusted EBITDA/revenue using reported figures (citations in each cell).

KPIs and Operating Metrics

KPI	Q2 2023	Q1 2024	Q2 2024
Comparable-store sales growth %	—	0.9%	2.4%
UWC sales % of total wash sales	69%	74%	72%
UWC members (approx, millions)	—	~2.1	~2.1
Net new UWC adds (thousands)	—	+35	+15
Express avg revenue per member ($)	—	—	$28.14
Avg retail ticket ($)	—	—	$14.88
Membership mix (Base/Plat/Ti)	—	—	~42% / 38% / 20%
Ending store count	449	482	491
Greenfields opened (quarter)	9	6	9
Net rent expense ($MM)	—	$26.5	$27.1
Cash & equivalents ($MM)	—	$10.7	$3.6

Estimates vs Actuals: Wall Street consensus from S&P Global was unavailable at time of analysis; no comparison could be made.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues ($MM)	FY2024	$988–$1,016	$988–$1,016	Maintained; mgmt expects low end
Comparable-store sales growth %	FY2024	0.5%–2.5%	0.5%–2.5%	Maintained; midpoint expected
Adjusted EBITDA ($MM)	FY2024	$291.5–$308	$291.5–$308	Maintained; high end expected
Adjusted Net Income ($MM)	FY2024	$99–$111	$99–$111	Maintained
Adjusted EPS ($)	FY2024	$0.30–$0.34	$0.30–$0.34	Maintained
Interest expense, net ($MM)	FY2024	$81	$81	Maintained
Rent expense, net ($MM)	FY2024	~$111	~$111	Maintained
Diluted weighted avg shares (MM)	FY2024	330	330	Maintained
New greenfield locations	FY2024	~40	~40	Maintained; timing shifted later
Capital expenditures ($MM)	FY2024	$364–$405	$364–$405	Maintained
Sale-leasebacks ($MM)	FY2024	$135–$150	$135–$150	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23 and Q1’24)	Current Period (Q2’24)	Trend
Subscription premiumization (Titanium)	Implementing Titanium; premium penetration rising . Q1: Titanium >20%, promos rolling off; Platinum set to $32.99; premium mix >60% .	Titanium ~20% mix, largely off promo; avg RPM +$2.27; Express RPM $28.14; premium mix ~60% (40% Platinum/20% Titanium) .	Improving
Retail traffic softness	Q4 comps +0.7% ; Q1 retail comps low negative teens .	Retail down low double digits YoY but moderating vs Q1; retail transactions weak; avg ticket +5.2% to $14.88 .	Slightly improving but soft
Marketing/customer acquisition	New VP Marketing; pivot to targeted acquisition .	Data-driven targeting leveraging 2.1M members; reactivating ~800k lapsed via tailored e-mails; H2 spend deployment .	Ramping in H2
Greenfield pipeline/timing	Plan ~40 opens in 2024 .	Some delays pushing opens later in year/early next; paybacks ~3 years; pipeline solid .	Timing delayed
Rent & sale-leasebacks	Q4 net rent $27.5M (+14.7%) . Q1 SLB $4.9M; net rent $26.5M .	Q2 SLB $13.8M; net rent ~$27.1M; cash rent +14% YoY; more leases .	Rising
Weather/hurricane impact	—	Hurricane Beryl: 42 Houston stores closed avg 2.9 days; Q3 comp impact ~20–30 bps .	One-off headwind
Competitive intrusion	Expect deceleration of new unit adds into 2025 .	Continued easing of intrusion; operators rationalizing; Mister benefits from scale/experience .	Easing

Management Commentary

“Our subscription business continued to prove its resilience, and the strength of our new Titanium offering drove a healthy increase in revenue per member.” — John Lai, CEO .
“Adjusted EBITDA margin increased 360 basis points to nearly 35%. … The vast majority of our Titanium wash club members are now paying the regular monthly rate and we are seeing a healthy increase in subscription revenue per member.” — Jedidiah Gold, CFO .
“Within the context of [FY2024 guidance] ranges… full year revenue [at] the low end… comp growth… around the midpoint… adjusted EBITDA… at the high end.” — Jedidiah Gold, CFO .
“We’re leveraging our database of over 2.1 million members… identifying look-a-like characteristics… targeted e-mails, paid social and Smart Search… starting to design tailored messages to win back [~800,000] lapsed members.” — John Lai, CEO .

Q&A Highlights

Retail dynamics: Retail declines moderated vs Q1; mix showed lower transactions but higher average ticket ($14.88, +5.2% YoY) as Titanium influenced upsell .
Membership and conversion: Net member growth modest due to focus on upgrades; conversion rates consistent at ~9–11% with core churn stable; reactivation campaigns underway .
Greenfields and returns: Pipeline solid but some openings delayed; paybacks ~3 years; year-2 cash-on-cash ~50%; maturation to $2.0–$2.3M AUV by year 3 .
Cost/margin outlook: Labor efficiencies, lower chemical cost per car, freight leverage, and G&A optimization helped Q2; margins to normalize to low-30% adjusted EBITDA margin in H2 with marketing/IT hiring and merit increases .
Hurricane Beryl impact: ~20–30 bps headwind to Q3 comps; 42 stores closed avg 2.9 days in July .

Estimates Context

S&P Global consensus for revenue/EPS/EBITDA was unavailable at time of analysis due to data access limits; no comparison to Street could be made. Values retrieved from S&P Global were unavailable.
Directionally, management’s commentary suggests Street may need to shift FY2024 revenue assumptions toward the low end of the range and lift EBITDA/margin assumptions toward the high end, reflecting premiumization and expense discipline offset by retail softness and later greenfield timing .

Key Takeaways for Investors

Premiumization is working: Titanium penetration (~20%) at standard pricing and 60% premium mix support RPM expansion and margin resilience despite retail softness .
Margin quality improved: Q2 adjusted EBITDA margin ~34.8% benefited from efficiencies and timing; expect normalization to low-30s in H2 as investments hit, but FY EBITDA tracking to high end of guidance .
Subscription durability: UWC at 72% of wash sales, stable churn, and strong conversion underpin predictable cash flows; targeted reactivation (~800k lapsed) could reaccelerate net member adds in H2 .
Retail remains the swing factor: Transactions are the key headwind; average ticket is rising, but marketing execution will be critical to improve traffic without diluting RPM .
Unit growth intact, timing later: Greenfields still ~40 for 2024 but shifted later; hurricane introduces transitory comp noise; long-term unit economics remain attractive (3-year paybacks) .
Balance sheet/liquidity: Cash ~$3.6M at Q2 with revolver borrowings $8.0M; continued SLBs and extended debt maturities (Q1 refinance) support growth funding, though rising rent is a structural cost .
Trading implications: Near-term narrative favors premiumization/margin strength against retail softness; positive setup if H2 marketing reactivations lift traffic and if competitive intrusion eases as expected .

Mister Car Wash, Inc. (MCW)·Q2 2024 Earnings Summary