QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40542
Mister Car Wash, Inc.
(Exact name of Registrant as specified in its Charter)
Delaware
47-1393909
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
222 E. 5th Street, Tucson, Arizona
85705
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (520) 615-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
MCW
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 23, 2026, the registrant had 328,894,540 shares of common stock, $0.01 par value per share, outstanding.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our future results of operations and financial position, business strategy and approach are forward-looking. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would” or the negative thereof or comparable terminology.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q due to various factors. These risks and uncertainties include, among other things, (i) the completion of the proposed Merger (as defined below) on the anticipated terms and timing, or at all, including the parties’ ability to obtain regulatory approvals and satisfy the other conditions to the completion of the Merger, (ii) the effect of the announcement or pendency of the Merger on the Company’s business, operating results, ability to retain and hire key personnel, and relationships with customers, suppliers, competitors and others, (iii) the effect of the restrictions imposed by the Merger Agreement (as defined below) during the pendency of the Merger, which may (x) disrupt the Company’s current plans and business operations, (y) impact the Company’s ability to pursue certain business opportunities or strategic transactions or (z) divert management’s attention from ongoing business operations, (iv) the ability of Parent (as defined below) to procure the financing required to complete the Merger, (v) the possibility that competing offers may be made, and the effect of such competing offers on the Merger and the parties’ respective rights under the Merger Agreement, (vi) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (vii) the fact that the Company may be required to pay a termination fee to Parent if the Merger Agreement is terminated in certain circumstances, (viii) litigation being instituted against the Company or other transaction parties, including their respective directors, managers or officers, in connection with the Merger; (ix) the uncertainty of the outcome of any such litigation and its effects on the parties to the Merger Agreement, (x) legislative, regulatory and economic developments, (xi) general economic conditions, (xii) the effect on the Company’s stock price if the Merger is not completed, which may decline significantly following the termination of the Merger Agreement, (xiii) the significant costs, fees and expenses the Company may incur in connection with the Merger, and (xiv) the effects on the Company of unknown liabilities related to the Merger.
Additional factors that could cause actual results to differ materially from those described in the forward-looking statements include, but are not limited to, those identified in Part I. Item 1A. “Risk Factors” and in Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”) and in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.
You are cautioned not to place undue reliance on such forward-looking statements. In addition, even if actual results are consistent with the forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q, they may not be indicative of results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.
As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “Mister Car Wash,” “Mister,” the “Company,” “we,” “us,” and “our,” refer to Mister Car Wash, Inc. and its subsidiaries on a consolidated basis.
(Amounts in thousands, except share and per share data)
March 31, 2026
December 31, 2025
Assets
Current assets
Cash and cash equivalents
$
54,627
$
28,450
Accounts receivable, net
850
639
Other receivables
17,554
15,485
Inventory, net
5,054
5,485
Prepaid expenses and other current assets
10,700
9,619
Total current assets
88,785
59,678
Property and equipment, net
930,371
914,022
Operating lease right of use assets, net
930,870
942,664
Other intangible assets, net
110,385
110,822
Goodwill
1,134,830
1,134,830
Other assets
10,801
11,122
Total assets
$
3,206,042
$
3,173,138
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
$
25,742
$
27,824
Accrued payroll and related expenses
27,116
25,074
Other accrued expenses
36,709
41,540
Current maturities of operating lease liability
54,543
53,625
Current maturities of finance lease liability
903
879
Deferred revenue
37,725
35,904
Total current liabilities
182,738
184,846
Long-term debt, net
790,043
796,893
Operating lease liability
895,298
906,371
Financing lease liability
12,109
12,344
Deferred tax liabilities, net
148,787
137,547
Other long-term liabilities
1,877
2,124
Total liabilities
2,030,852
2,040,125
Stockholders’ equity
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 328,685,816 and 328,282,533 shares outstanding as of March 31, 2026 and December 31, 2025, respectively
3,292
3,288
Additional paid-in capital
869,301
862,095
Accumulated other comprehensive income (loss)
492
(293
)
Retained earnings
302,105
267,923
Total stockholders’ equity
1,175,190
1,133,013
Total liabilities and stockholders’ equity
$
3,206,042
$
3,173,138
See accompanying notes to consolidated financial statements.
(Dollar amounts in thousands, except per share data)
(Unaudited)
1. Nature of Business
Mister Car Wash, Inc., a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” “our” or the “Company”), is based in Tucson, Arizona and is a provider of conveyorized car wash services. We primarily operate Express Exterior Locations, which offer express exterior cleaning services along with free vacuum services, and interior cleaning services at select locations. As of March 31, 2026, we operated 549 car washes in 21 states.
Merger Agreement
On February 17, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MCW Parent, LP, a Delaware limited partnership (“Parent”), Boson Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), and, solely for purposes of the Borrower Provisions (as defined in the Merger Agreement), one of our wholly owned subsidiaries, Mister Car Wash Holdings, Inc. a Delaware corporation (“Borrower”), pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). The Merger has been approved by the board of directors of the Company, acting upon the recommendation of a special committee of the board of directors consisting only of directors that the board of directors determined to each be a “disinterested director” (as defined in Section 144 of the General Corporation Law of the State of Delaware (the “DGCL”)) with respect to the transactions contemplated by the Merger Agreement.
If the Merger is completed, our common stock will no longer be listed on The Nasdaq Stock Market LLC and we will become a privately held company, owned by investment funds managed by Leonard Green & Partners, L.P. (“LGP”), and our common stock will be deregistered under the Securities Exchange Act of 1934, as amended.
Pursuant to the terms of the Merger Agreement, neither Mister Car Wash, on the one hand, nor the Buyer Parties, on the other hand, are required to consummate the Merger prior to April 20, 2026. The Merger is expected to close during the second quarter of fiscal 2026, subject to obtaining regulatory approvals and the satisfaction or waiver of other customary closing conditions.
Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (i) each share of our common stock that is outstanding as of immediately prior to the Effective Time (other than shares of our common stock described in clauses (ii) or (iii) of this sentence) will be cancelled and extinguished and automatically converted into the right to receive cash in an amount per share equal to $7.00, without interest thereon (the “Per Share Price”), (ii) each share of our common stock that is (a) held by us as treasury stock or (b) owned by the Buyer Parties or any of their direct or indirect subsidiaries as of immediately prior to the Effective Time, including the shares of our common stock held by investment funds affiliated with LGP and the shares contributed to Parent by Company executives who execute a Management Rollover Agreement (as defined in the Merger Agreement), if any, will automatically be cancelled and extinguished without any conversion thereof or consideration paid therefor, and (iii) each share of our common stock that is issued and outstanding as of immediately prior to the Effective Time and held by any person or entity (including a “beneficial owner”) who has validly demanded and not validly withdrawn or otherwise lost its statutory appraisal rights in respect of such share in accordance with Section 262 of the DGCL (such shares, “Dissenting Company Shares”) will not be converted into, or represent the right to receive, the Per Share Price, and will instead be entitled to receive payment of the appraised value of such Dissenting Company Shares in accordance with the provisions of Section 262 of the DGCL.
The foregoing description of the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement attached as Exhibit 2.1 to our Current Report on Form 8-K filed on February 17, 2026.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2025 included in the 2025 Form 10-K.
The consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a
normal and recurring nature. The consolidated results of operations and comprehensive income for the three months ended March 31, 2026 are not necessarily indicative of the consolidated results of operations and comprehensive income that may be expected for any other future interim or annual period.
Use of Estimates
The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the periods reported. Some of the significant estimates that we have made pertain to the determination of deferred tax assets and liabilities and certain assumptions used related to the evaluation of goodwill, intangibles, and property and equipment asset impairment. Actual results could differ from those estimates.
Accounts Receivable, Net
Accounts receivable are presented net of an allowance for doubtful accounts of $23 and $31 as of March 31, 2026 and December 31, 2025, respectively. The activity in the allowance for doubtful accounts was immaterial for the three months ended March 31, 2026 and 2025.
Other Receivables
Other receivables consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Insurance receivable
$
6,766
$
4,921
Construction receivable
5,966
4,960
Employee retention credit receivable
1,301
1,635
Income tax receivable
443
1,011
Other
3,078
2,958
Total other receivables
$
17,554
$
15,485
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Spare parts
$
5,017
$
3,872
Prepaid insurance
948
1,947
Other
4,735
3,800
Total prepaid expenses and other current assets
$
10,700
$
9,619
Inventory, Net
Inventory consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Chemical washing solutions
$
5,098
$
5,537
Other
60
60
Total inventory, gross
5,158
5,597
Reserve for obsolescence
(104
)
(112
)
Total inventory, net
$
5,054
$
5,485
The activity in the reserve for obsolescence was immaterial for the three months ended March 31, 2026 and 2025.
Derivative Financial Instruments
The Company has a pay fixed, receive variable interest rate swap contract (“Swap”) to manage its exposure to changes in interest rates. The Swap is recognized in the consolidated balance sheets at fair value. The Swap is a cash flow hedge and is recorded using hedge accounting, as such, changes in the fair value of the Swap are recorded in other comprehensive income (loss), net of tax until the hedged item is recognized in earnings. Amounts reported in other comprehensive income, net of tax related to the Swap are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The swap is scheduled to terminate June 30, 2027.
The Company assesses, both at the inception of the hedge and on an ongoing basis, whether the derivative used as a hedging instrument is highly effective in offsetting the changes in the cash flow of the hedged item. If it is determined that the derivative is not highly effective as a hedge or ceases to be highly effective, the Company will discontinue hedge accounting prospectively. See Note 9 Fair Value Measurements and Note 10 Interest Rate Swap for additional information.
Revenue Recognition
The following table summarizes the composition of our net revenues for the periods presented:
Three Months Ended March 31,
2026
2025
Recognized over time
$
210,808
$
191,848
Recognized at a point in time
66,675
69,685
Other revenue
430
123
Net revenues
$
277,913
$
261,656
Earnings Per Share
Reconciliations of the numerators and denominators of the basic and diluted earnings per share calculations for the periods presented are as follows:
Three Months Ended March 31,
2026
2025
Numerator
Net income
$
34,182
$
27,000
Denominator
Weighted-average common shares outstanding - basic
328,477,910
324,200,282
Effect of potentially dilutive securities
Stock options
2,592,085
4,371,280
Restricted stock units
3,168,492
2,903,643
Stock purchase rights
71,440
3,843
Weighted-average common shares outstanding - diluted
334,309,927
331,479,048
Earnings per share - basic
$
0.10
$
0.08
Earnings per share - diluted
$
0.10
$
0.08
The following potentially dilutive shares were excluded from the computation of diluted earnings per share for the periods presented because including them would have been antidilutive:
Three Months Ended March 31,
2026
2025
Stock options
6,193,066
4,924,465
Restricted stock units
—
6
Stock purchase rights
—
6
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires a PBE to disclose additional information about specific expense categories in the notes to financial statements at interim and annual periods. This information is generally not presented in the financial statements. The ASU requires that at each interim and annual period a PBE: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization; (2) include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements; (3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are still assessing the impact of this ASU.
In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This ASU is intended to improve the operability and application of guidance related to capitalized software development costs. The ASU is
effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are still assessing the impact of this ASU.
In December 2025, the FASB issued ASU No. 2025-11, Narrow-Scope Improvements to Interim Reporting (Topic 270). This ASU is intended to clarify interim disclosure requirements and the applicability of Topic 270. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are still assessing the impact of this ASU.
3. Property and Equipment, Net
Property and equipment, net consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Land
$
142,725
$
133,377
Buildings and improvements
444,797
436,005
Finance leases
16,497
16,497
Leasehold improvements
176,833
174,232
Vehicles and equipment
400,290
394,408
Furniture, fixtures and equipment
107,035
107,212
Construction in progress
51,731
42,905
Property and equipment, gross
1,339,908
1,304,636
Accumulated depreciation
(404,121
)
(385,440
)
Accumulated amortization - finance leases
(5,416
)
(5,174
)
Property and equipment, net
$
930,371
$
914,022
For the three months ended March 31, 2026 and 2025, depreciation expense was $22,755 and $20,207, respectively.
For the three months ended March 31, 2026 and 2025, amortization expense on finance leases was $242 and $244, respectively.
As of March 31, 2026, the two car wash locations classified as held for sale have a net book value of $3,294. The assets of these locations are recorded in property and equipment, net on the consolidated balance sheets.
4. Other Intangible Assets, Net
Other intangibles assets, net consisted of the following as of the periods presented:
March 31, 2026
December 31, 2025
Gross Carrying Amount
Accumulated Amortization
Gross Carrying Amount
Accumulated Amortization
Trade names and trademarks
$
107,000
$
—
$
107,000
$
—
Customer relationships
9,700
7,603
$
9,700
7,486
Covenants not to compete
6,760
5,472
6,760
5,152
Other intangible assets, net
$
123,460
$
13,075
$
123,460
$
12,638
For the three months ended March 31, 2026 and 2025, amortization expense associated with our finite-lived intangible assets was $437 and $466, respectively.
As of March 31, 2026, estimated future amortization expense was as follows:
Goodwill consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Balance at beginning of period
$
1,134,830
$
1,134,734
Acquisitions
—
96
Balance at end of period
$
1,134,830
$
1,134,830
Goodwill is generally deductible for tax purposes, except for the portion related to purchase accounting step-up goodwill.
6. Other Accrued Expenses
Other accrued expenses consisted of the following for the periods presented:
As of
March 31, 2026
December 31, 2025
Accrued tax expense
$
11,564
$
12,720
Insurance expense
8,237
6,034
Utilities
7,533
6,107
Greenfield development accruals
5,194
13,151
Other
4,181
3,528
Total other accrued expenses
$
36,709
$
41,540
Accrued tax expense is comprised of federal, state, and local taxes payable for property, income, sales, use, and personal property.
Greenfield development accruals represent an obligation to pay for invoices not yet received, primarily related to land and buildings and improvements, on properties which we have taken control of as of March 31, 2026 and December 31, 2025.
7. Income Taxes
The effective income tax rates on continuing operations for the three months ended March 31, 2026 and 2025 were 26.8% and 26.9%, respectively. In general, the effective tax rates differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible expenses such as those related to certain executive compensation, and discrete tax expenses related to stock option exercises during the period.
The year-to-date provision for income taxes for the three months ended March 31, 2026 included taxes on earnings at an anticipated annual effective tax rate of 25.8% and a net, unfavorable tax impact of $491 related primarily to discrete tax expense originating from stock options exercised during the three months ended March 31, 2026.
The year-to-date provision for income taxes for the three months ended March 31, 2025 included taxes on earnings at an anticipated annual effective tax rate of 25.4% and a net, unfavorable tax impact of $561 related primarily to discrete tax expense originating from stock options exercised during the three months ended March 31, 2025.
For the three months ended March 31, 2026 and 2025, we recorded $25 and $21, respectively, related to unrecognized tax benefits or interest and penalties related to any uncertain tax positions.
8. Debt
Long-term debt consisted of the following as of the periods presented:
As of
Maturity
Stated Interest Rate
Effective Interest Rate
March 31, 2026
December 31, 2025
Credit agreement
First lien term loan
March 27, 2031
5.92%
6.12%
$
793,074
$
800,074
Unamortized discount and debt issuance costs
(3,031
)
(3,181
)
Total long-term portion of debt, net
$
790,043
$
796,893
As of March 31, 2026, there are no payments required until the maturity date.
As of March 31, 2026 and December 31, 2025, total unamortized discount and debt issuance costs were $4,398 and $4,661, respectively, and accumulated amortization of debt issuance costs was $2,296 and $2,034, respectively.
For the three months ended March 31, 2026 and 2025, the amortization of debt issuance costs in interest expense, net in the consolidated statements of operations and comprehensive income was approximately $262 and $285, respectively.
Amended and Restated First Lien Credit Agreement
On August 21, 2014, we entered into a Credit Agreement (“Credit Agreement”) which was originally comprised of a term loan (“First Lien Term Loan”) and a revolving commitment (“Revolving Commitment”), which was subsequently amended and restated. The Credit Agreement was collateralized by substantially all personal property (including cash, inventory, property and equipment, and intangible assets), real property, and equity interests owned by us.
First Lien Term Loan
In March 2024, we entered into Amendment No. 5 to the Credit Agreement with the lenders party thereto, and Bank of America, N.A. (“BofA”) as the successor administrative agent and collateral agent. This amendment further modified the Credit Agreement by providing $925,000 in first lien term commitments, consisting of $901,201 to refinance outstanding term loans and $23,799 in additional incremental term commitments (collectively, the “2024 Term Loans”). Starting September 30, 2024, the loans will be amortized in equal quarterly installments at an annual rate of 1.00% of the original principal amount. In connection with Amendment No. 5, we expensed $1,882 of previously unamortized debt issuance costs as a loss on extinguishment of debt in the consolidated statements of operations and comprehensive income.
In November 2024, we entered into Amendment No. 6 to the Credit Agreement with the lenders party thereto, and BofA as the successor administrative agent and collateral agent. This amendment further modified the Credit Agreement by resetting the soft call protection of 1% for voluntary prepayments of the Term Loans to last for six months after the effective date of this Amendment, as well as repricing the Term and Revolving Loans margins, where each was reduced by 0.25%. In connection with Amendment No. 6, we expensed $94 of previously unamortized debt issuance costs as a loss on extinguishment of debt in the consolidated statements of operations and comprehensive income.
The First Lien Term Loan borrowings bear interest equal to the SOFR rate plus a margin, with margin starting at 2.75% and can decrease to 2.50% and 2.25% based on the First Lien Net Leverage Ratio.
Revolving Commitment
Amendment No. 5 to our Credit Agreement also increased our borrowing capacity under the Revolving Commitment from $150,000 to $300,000. Any unused commitment fee is also payable based on the First Lien Net Leverage Ratio. The Credit Agreement requires a Rent Adjusted Total Net Leverage Ratio no greater than 6.50 to 1.00, tested quarterly beginning with the quarter ending September 30, 2024, for the benefit of lenders holding the Revolving Commitment.
The maximum available borrowing capacity under the Revolving Commitment is reduced by outstanding letters of credit under the Revolving Commitment. As of March 31, 2026 and December 31, 2025, the available borrowing capacity under the Revolving Commitment was $299,926.
In addition, an unused commitment fee based on our First Lien Net Leverage Ratio is payable on the average of the unused borrowing capacity under the Revolving Commitment. As of March 31, 2026 and December 31, 2025, the unused commitment fee was 0.20%.
Standby Letters of Credit
As of March 31, 2026, we have a letter of credit sublimit of $90,000 under the Revolving Commitment, provided that the total utilization of revolving commitments under the Revolving Commitment does not exceed $300,000. Any letter of credit issued under the Credit Agreement has an expiration date which is the earlier of (i) no later than 12 months from the date of issuance or (ii) five business days prior to the maturity date of the Revolving Commitment, as amended under Amendment No. 2 to the Credit Agreement. Letters of credit under the Revolving Commitments reduce the maximum available borrowing capacity under the Revolving Commitment. As of March 31, 2026 and December 31, 2025, the amounts associated with outstanding letters of credit were $74.
Covenants
As of March 31, 2026, we were in compliance with all covenants related to our long-term debt.
The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of March 31, 2026:
Fair Value Measurements
Total
Level 1
Level 2
Level 3
Assets
Deferred compensation plan
$
7,284
$
7,284
$
—
$
—
Liabilities
Deferred compensation plan
$
4,658
$
4,658
$
—
$
—
Interest rate swap
$
532
$
—
$
532
$
—
Contingent consideration
$
1,933
$
—
$
—
$
1,933
The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2025:
Fair Value Measurements
Total
Level 1
Level 2
Level 3
Assets
Deferred compensation plan
$
7,464
$
7,464
$
—
$
—
Liabilities
Deferred compensation plan
$
4,675
$
4,675
$
—
$
—
Interest rate swap
$
234
$
—
$
234
$
—
Contingent consideration
$
1,933
$
—
$
—
$
1,933
We measure the fair value of our financial assets and liabilities using the highest level of inputs that are available as of the measurement date. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair value due to the immediate or short-term maturity of these financial instruments. See Note 10 Interest Rate Swap for additional information on the interest rate swap.
As of March 31, 2026, and December 31, 2025, we did not hold any cash investments.
We maintain a deferred compensation plan for a certain group of our highly compensated employees, in which certain of our executive officers participate in. The plan allows eligible participants to defer up to 90% of their base salary and/or incentive plan compensation as well as any refunds from our 401(k) Plan. Participants may elect investment funds selected by the Company in whole percentages. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds. These investment funds consist primarily of equity securities, such as common stock and mutual funds, and fixed income securities and are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. These investment options do not represent actual ownership of or ownership rights in the applicable funds; they serve the purpose of valuing the account and the corresponding obligation of the Company.
As of March 31, 2026 and December 31, 2025, the fair value of our First Lien Term Loan approximated its carrying value due to the debt’s variable interest rate terms.
We recognized a Level 3 contingent consideration liability in connection with the Downtowner Car Wash acquisition in December 2021. We measured its contingent consideration liability using Level 3 unobservable inputs. The contingent consideration liability is associated with the achievement of certain targets and is estimated at each balance sheet date by considering among other factors, results of completed periods and our most recent financial projection for future periods subject to earn-out payments. There are two components to the contingent consideration: a payment when we obtained the certificate of occupancy for the car wash and opened it to the public in 2023 and an annual payment based on certain financial metrics of the acquired business. A change in the forecasted revenue or projected opening dates could result in a significantly lower or higher fair value measurement. We determined that there were no significant changes to the unobservable inputs that would have resulted in a change in fair value of this contingent consideration liability at March 31, 2026. No payments were made during the three months ended March 31, 2026 and 2025.
During the three months ended March 31, 2026 and 2025, there were no transfers between fair value measurement levels.
10. Interest Rate Swap
On April 28, 2025, the Company executed a pay-fixed, receive-floating interest rate swap (the “Swap”) to mitigate variability in forecasted interest payments on an aggregate notional amount of $250,000 of the Company’s variable-rate First Lien Term Loan. The Swap has an effective date of June 30, 2025, with a maturity date of June 30, 2027. The Company designated the Swap as a cash flow hedge.
As of March 31, 2026, information pertaining to the Swap is as follows:
Notional Amount
Fair Value
Pay-Fixed
Receive-Floating
Maturity Date
$
250,000
$
532
3.37%
3.67%
June 30, 2027
As of March 31, 2026 and December 31, 2025, the current portion of the fair value of the Swap was $673 and $52, respectively, and is included in prepaid and other current assets in the accompanying consolidated balance sheets.
As of March 31, 2026 and December 31, 2025, the long-term portion of the fair value of the Swap was $141 and $286, respectively, and is included in other long-term liabilities in the accompanying consolidated balance sheets.
For the three months ended March 31, 2026 and 2025, amounts reported in other comprehensive income in the accompanying consolidated statements of operations and comprehensive income are net of tax of $262 and $0, respectively.
11. Leases
Balance sheet information related to leases consisted of the following for the periods presented:
As of
Classification
March 31, 2026
December 31, 2025
Assets
Operating
Operating right of use assets, net
$
930,870
$
942,664
Finance
Property and equipment, net
11,081
11,323
Total lease assets
$
941,951
$
953,987
Liabilities
Current
Operating
Current maturities of operating lease liability
$
54,543
$
53,625
Finance
Current maturities of finance lease liability
903
879
Long-term
Operating
Operating lease liability
895,298
906,371
Finance
Financing lease liability
12,109
12,344
Total lease liabilities
$
962,853
$
973,219
Components of total lease cost, net, consisted of the following for the periods presented:
Three Months Ended March 31,
2026
2025
Operating lease expense(a)
$
32,585
$
30,704
Finance lease expense
Amortization of lease assets
243
244
Interest on lease liabilities
234
250
Short-term lease expense
9
17
Variable lease expense(b)
7,522
7,894
Total lease expense
$
40,593
$
39,109
a)
Operating lease expense includes an immaterial amount of sublease income and is included in other store operating expenses and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.
b)
Variable lease costs consist of property taxes, property insurance, and common area or other maintenance costs for our leases of land and buildings and is included in other store operating expenses in the accompanying consolidated statements of operations and comprehensive income.
The following includes supplemental information for the periods presented:
Three Months Ended March 31,
2026
2025
Operating cash flows from operating leases
$
31,578
$
29,520
Operating cash flows from finance leases
$
234
$
250
Financing cash flows from finance leases
$
212
$
193
Operating lease ROU assets obtained in exchange for lease liabilities
$
2,859
$
7,260
Weighted-average remaining operating lease term
13.30
13.77
Weighted-average remaining finance lease term
13.92
14.65
Weighted-average operating lease discount rate
8.29
%
8.11
%
Weighted-average finance lease discount rate
7.34
%
7.34
%
As of March 31, 2026, lease obligation maturities were as follows:
Fiscal Year Ending:
Operating Leases
Finance Leases
2026 (remaining nine months)
$
95,449
$
1,346
2027
124,500
1,819
2028
118,423
1,846
2029
117,652
1,575
2030
117,440
1,549
Thereafter
1,049,160
15,302
Total future minimum obligations
$
1,622,624
$
23,437
Present value discount
(672,783
)
(10,425
)
Present value of net future minimum lease obligations
$
949,841
$
13,012
Current portion
(54,543
)
(903
)
Long-term obligations
$
895,298
$
12,109
Forward-Starting Leases
As of March 31, 2026, we entered into seven leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2026 through 2028 with initial lease terms of 15 to 20 years.
As of December 31, 2025, we entered into eight leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in years 2026 through 2028 with initial lease terms of 15 to 20 years.
Sale-Leaseback Transactions
During the three months ended March 31, 2026 and 2025, we did not complete any sale-leaseback transactions.
12. Stockholders’ Equity
As of March 31, 2026, there were 1,000,000,000 shares of common stock authorized, 334,858,737 shares of common stock issued, and 328,685,816 shares of common stock outstanding.
As of December 31, 2025, there were 1,000,000,000 shares of common stock authorized, 334,455,454 shares of common stock issued, and 328,282,533 shares of common stock outstanding.
As of March 31, 2026 and December 31, 2025, there were 5,000,000 shares of preferred stock authorized, and none were issued or outstanding.
We use the cost method to account for treasury stock. As of March 31, 2026 and December 31, 2025, we had 6,172,921 shares of treasury stock. As of March 31, 2026 and December 31, 2025, the cost of treasury stock included in additional paid-in capital in the accompanying consolidated balance sheets was $28,895.
13. Stock-Based Compensation
We recognize stock-based compensation expense associated with stock options and restricted stock units ("RSUs"), and stock purchase rights. Stock options and RSUs are granted under the 2014 Stock Option Plan of Hotshine Holdings, Inc. (the “2014 Plan”)
and 2021 Incentive Award Plan (the “2021 Plan”) while stock purchase rights are granted under the 2021 Employee Stock Purchase Plan (“2021 ESPP”).
Refer to our 2025 Form 10-K for additional details on employee stock incentive plans.
Share-Based Payment Valuation
The grant date fair value of Time Vesting Options granted is determined using the Black-Scholes option-pricing model. The grant date fair value of stock purchase rights granted under the 2021 ESPP is determined using the Black-Scholes option-pricing model.
2021 ESPP
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock purchase rights granted under the 2021 ESPP during the periods presented:
Three Months Ended March 31,
2026
2025
Expected volatility
36.95%
42.14%
Risk-free interest rate
3.81%
4.44%
Expected term (in years)
0.49
0.49
Expected dividend yield
None
None
Stock Options
A summary of our stock option activity during the period presented is as follows:
Time Vesting Options
Performance Vesting Options
Total Number of Stock Options
Weighted-Average Exercise Price
Outstanding as of December 31, 2025
8,978,524
1,049,723
10,028,247
$
6.70
Granted
—
—
—
—
Exercised
(180,521
)
(101,140
)
(281,661
)
1.32
Forfeited
(89,417
)
—
(89,417
)
8.97
Outstanding as of March 31, 2026
8,708,586
948,583
9,657,169
$
6.83
Options vested or expected to vest as of March 31, 2026
8,425,969
948,583
9,374,552
$
8.00
Options exercisable as of March 31, 2026
5,521,263
948,583
6,469,846
$
6.30
The number and weighted-average grant date fair value of stock options during the period presented are as follows:
Number of Stock Options
Weighted-Average Grant Date Fair Value
Time Vesting Options
Performance Vesting Options
Time Vesting Options
Performance Vesting Options
Unvested as of December 31, 2025
3,545,893
—
$
3.77
—
Granted
—
—
—
—
Vested
(346,937
)
—
3.83
—
Forfeited
(11,632
)
—
4.04
—
Unvested as of March 31, 2026
3,187,324
—
$
3.77
—
There were no Time Vesting Options granted during the three months ended March 31, 2026. There were no Performance Vesting Options granted during the three months ended three months ended March 31, 2026.
The fair value of shares attributable to stock options that vested during the three months ended March 31, 2026 was $2,457.
As of March 31, 2026, the weighted-average remaining contractual life of outstanding stock options was approximately 5.58years.
A summary of our RSU activity during the period presented is as follows:
Restricted Stock Units
Weighted-Average Grant Date Fair Value
Unvested as of December 31, 2025
5,398,654
$
7.33
Granted
—
—
Vested
(121,622
)
9.25
Forfeited
(123,108
)
6.92
Unvested as of March 31, 2026
5,153,924
$
7.29
There were no RSUs granted during the three months ended March 31, 2026.
The fair value of shares attributable to RSUs that vested during the three months ended March 31, 2026 was $866.
As of March 31, 2026, the weighted-average remaining contractual life of outstanding RSUs was approximately 8.61 years.
Stock-Based Compensation Expense
We estimated a forfeiture rate of 10.26% for awards with service-based vesting conditions based on historical experience and future expectations of the vesting of these share-based payments. We used this rate as an assumption in calculating stock-based compensation expense for Time Vesting Options, RSUs, and stock purchase rights granted under the 2021 ESPP.
Total stock-based compensation expense, by caption, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:
Three Months Ended March 31,
2026
2025
Cost of labor and chemicals
$
2,974
$
2,782
General and administrative
3,864
4,061
Total stock-based compensation expense
$
6,838
$
6,843
Total stock-based compensation expense, by award type, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:
Three Months Ended March 31,
2026
2025
Time Vesting Options
$
1,567
$
1,863
RSUs
5,033
4,788
2021 ESPP
238
192
Total stock-based compensation expense
$
6,838
$
6,843
As of March 31, 2026, total unrecognized compensation expense related to unvested Time Vesting Options was $4,528, which is expected to be recognized over a weighted-average period of 3.30years.
As of March 31, 2026, there was no unrecognized compensation expense related to unvested Performance Vesting Options as the completion of the IPO satisfied the performance condition and as a result, all outstanding Performance Vesting Options vested.
As of March 31, 2026, total unrecognized compensation expense related to unvested RSUs was $13,285, which is expected to be recognized over a weighted-average period of 1.67years.
As of March 31, 2026, there was no unrecognized compensation expense related to unvested stock purchase rights under the 2021 ESPP as the purchase period ended on March 31, 2026.
14. Commitments and Contingencies
Litigation
We are involved from time to time in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. The Company does not believe that any proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows; it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.
We carry a broad range of insurance coverage, including general and business auto liability, commercial property, workers’ compensation, cyber risk, and general umbrella policies. As of March 31, 2026 and December 31, 2025, we accrued $8,224 and $6,027, respectively, for assessments on insurance claims filed, which are included in other accrued expenses in the accompanying consolidated balance sheets. As of March 31, 2026 and December 31, 2025, we recorded $6,766and $4,921, respectively, in receivables from our non-healthcare insurance carriers related to these insurance claims, which are included in other receivables in the accompanying consolidated balance sheets. The receivables are paid when the claim is finalized, and the reserved amounts on these claims are expected to be paid within one year.
15. Business Combinations
From time to time, we may pursue acquisitions of conveyorized car washes that either strategically fit with the business or expand our presence in new and attractive markets.
We account for business combinations under the acquisition method of accounting. The assets acquired and liabilities assumed in connection with business acquisitions are recorded at the date of acquisition at their estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired and intangible assets assigned, recorded as goodwill. Significant judgment is required in estimating the fair value of assets acquired and liabilities assumed and in assigning their respective useful lives. Accordingly, we may engage third-party valuation specialists to assist in these determinations. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management; but are inherently uncertain.
The unaudited consolidated financial statements reflect the operations of an acquired business starting from the effective date of the acquisition. No acquisition-related costs were expensed during the three months ended March 31, 2026 and 2025. Acquisition-related costs are expensed as incurred and are included in general and administrative expenses in the accompanying unaudited consolidated statements of operations.
2026 Acquisitions
We did not consummate any acquisitions during the three months ended March 31, 2026.
2025 Acquisitions
For the year ended December 31, 2025, we acquired the assets and liabilities of five conveyorized car washes in one acquisition. The transaction was for an immaterial amount of cash consideration, and we do not believe the acquisition is material to our overall consolidated financial statements. The cash consideration for the transaction is included in purchases of property and equipment in the investing activities on the statement of cash flows.
The acquisitions were located in the following markets:
Location (Seller)
Number of Washes
Month Acquired
Texas (Whistle Express)
5
October
16. Segment Information
The Company operates as one operating segment where it derives its revenues from activities related to providing car wash services at its car wash locations that are geographically diversified throughout the United States and have similar economic characteristics and nature of services.
To assess consolidated performance the chief operating decision maker (“CODM”), who is the Chief Executive Officer, evaluates the operating results and performance through net income. Our CODM regularly reviews net income as reported on the consolidated statement of operations and comprehensive income and total assets as reported on the consolidated balance sheet for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. As presented on the consolidated statements of operations and comprehensive income, the CODM views consolidated expense information related to the cost of labor and chemicals, other store operating expenses, and general and administrative expenses to be significant and there are no other significant segment expenses or items that would require disclosure.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our 2025 Form 10-K. This discussion contains forward-looking statements based upon our current plans, expectations and beliefs, which are subject to risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in other parts of this Quarterly Report on Form 10-Q and in Part I, Item 1A. “Risk Factors” and in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Form 10-K.
Who We Are
Mister Car Wash, Inc. is the nation's leading car wash brand, primarily offering express exterior cleaning services, with interior cleaning services at select locations, across 549 car washes in 21 states as of March 31, 2026. We offer a monthly subscription program, which we call the Unlimited Wash Club® (“UWC”), as a flexible, quick, and convenient option for customers to keep their cars clean. Our scale and over 25 years of innovation allow us to drive operating efficiencies and invest in training, infrastructure, and technology that improve speed of service, quality, and sustainability and realize strong financial performance.
Factors Affecting Our Business and Trends
We believe that our business and growth depend on a number of factors that present significant opportunities for us and may involve risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
•
Growth in comparable store sales. Comparable store sales have been a driver of our net revenue growth. We will seek to continue to grow our comparable store sales by increasing the number of UWC Members, maximizing efficiency and throughput of our car wash locations, optimizing marketing spend to add new customers, and increasing customer visitation frequency.
•
Number and loyalty of UWC Members. The UWC program is an important element of our business. UWC Members contribute a large portion of our net revenue and provide recurring revenue through their monthly membership fees.
•
Labor management. Hiring and retaining skilled team members and experienced management represents one of our largest investments. We believe people are the key to our success and we have been able to successfully attract and retain engaged, high-quality team members by paying competitive wages, offering attractive benefit packages, and providing robust training and development opportunities. While the competition for skilled labor is intense and subject to high turnover, we believe our approach to wages and benefits will continue to allow us to attract suitable team members and management to support our growth.
Factors Affecting the Comparability of Our Results of Operations
Our results have been affected by, and may in the future be affected by, the following factors, which must be understood in order to assess the comparability of our period-to-period financial performance and condition.
Greenfield Location Development
While we continue to explore and evaluate acquisition opportunities, more recently, a primary component of our growth strategy has been to grow through greenfield development of Mister Car Wash locations, with particular focus on Express Exterior Locations, and we anticipate further pursuit of this strategy in the future. We believe such a strategy will provide a more controllable pipeline of unit growth for future locations in existing and adjacent markets.
The comparability of our results may be impacted by the inclusion of financial performance of greenfield locations that have not delivered a full fiscal year of financial results nor matured to average unit volumes, which we typically expect after approximately three full years of operation.
Acquisitions
In the three months ended March 31, 2026, we did not consummate any acquisitions. Following acquisition, we implement a variety of operational improvements to unify branding and enhance profitability. As soon as feasible, we work to 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 Chemistry™ 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. 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.
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.
On February 17, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MCW Parent, LP, a Delaware limited partnership (“Parent”), Boson Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), and, solely for purposes of the Borrower Provisions (as defined in the Merger Agreement), one of our wholly owned subsidiaries, Mister Car Wash Holdings, Inc. a Delaware corporation (“Borrower”), pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into Mister Car Wash, with Mister Car Wash continuing as the surviving corporation (the “Merger”). Parent and Merger Sub are each affiliates of the private equity investment firm Leonard Green & Partners, L.P.
Pursuant to the terms of the Merger Agreement, neither Mister Car Wash, on the one hand, nor the Buyer Parties, on the other hand, are required to consummate the Merger prior to April 20, 2026. The Merger is expected to close in the first half of 2026, subject to obtaining regulatory approvals and the satisfaction or waiver of other customary closing conditions.
If the Merger is completed, our common stock will no longer be listed on The Nasdaq Stock Market LLC and we will become a privately held company and deregistered under the Securities Exchange Act of 1934, as amended.
We prepare and analyze various operating and financial data to assess the performance of our business and to help in the allocation of our resources. The key operating performance and financial metrics and indicators we use are set forth below, as of and for the three months ended March 31, 2026 and 2025.
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Financial and Operating Data:
Location count (end of period)
549
518
Comparable store sales growth
3.9
%
6.0
%
UWC Members (in thousands, end of period)
2,468
2,227
UWC sales as a percentage of total wash sales
76
%
73
%
Net income
$
34,182
$
27,000
Net income margin
12.3
%
10.3
%
Adjusted EBITDA
$
96,663
$
85,649
Adjusted EBITDA margin
34.8
%
32.7
%
Location Count (end of period)
Our location count refers to the total number of car wash locations at the end of a period, inclusive of new greenfield locations and acquired locations and offset by closed locations. The total number of locations that we operate, as well as the timing of location openings, acquisitions, and closings, have, and will continue to have, an impact on our performance. In the three months ended March 31, 2026, our location count increased by one net new location, including two greenfield locations, offset by one location closure.
Our Express Exterior Locations, which offer express exterior cleaning services, comprise 487 of our current locations and our Interior Cleaning Locations, which offer both express exterior cleaning services and interior cleaning services, comprise 62 of our current locations.
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. A location converted from an Interior Cleaning Location format to an Express Exterior Location format is excluded when the location did not offer interior cleaning services in the current period but did offer interior cleaning services in the prior year period. Comparable store sales growth is the percentage change in total wash sales of all comparable store car washes.
Increasing the number of new locations is a component of our growth strategy and as we continue to execute on our growth strategy, we expect that a significant portion of our sales growth will be attributable to non-comparable store sales. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy.
UWC Members (end of period)
Members of our monthly subscription service are known as UWC Members. We view the number of UWC Members and the growth in the number of UWC Members on a net basis from period to period as key indicators of our revenue growth. The number of UWC Members has grown over time as we have acquired new customers and retained previously acquired customers. There were approximately 2.5 million UWC Members as of March 31, 2026. UWC Members grew by approximately 9% from December 31, 2025 through March 31, 2026.
UWC Sales as a Percentage of Total Wash Sales
UWC sales as a percentage of total wash sales represents the penetration of our subscription membership program as a percentage of our overall wash sales. Total wash sales are defined as the net revenue generated from express exterior cleaning services and interior cleaning services for both UWC Members and retail customers. UWC sales as a percentage of total wash sales is calculated as sales generated from UWC Members as a percentage of total wash sales. UWC sales were 76% and 73% of our total wash sales for the three months ended March 31, 2026 and 2025, respectively.
Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Adjusted EBITDA is defined as net income before interest expense, net, income tax provision, depreciation and amortization expense, (gain) loss on sale of assets, stock-based compensation expense, acquisition expenses, non-cash rent expense, debt refinancing costs, and other nonrecurring charges. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenues for a given period.
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in future periods, and any such modification may be material. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA in connection with establishing discretionary annual incentive compensation; to evaluate in conjunction with U.S. GAAP measures of performance, the effectiveness of our business strategies; to make budgeting decisions; and because our Credit Agreement uses measures similar to Adjusted EBITDA to measure our compliance with certain covenants.
Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as a substitute for net income, net income margin, or any other financial measure presented in accordance with GAAP. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.
The following is a reconciliation of net income to Adjusted EBITDA for the periods presented.
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Net income
$
34,182
$
27,000
Interest expense, net
12,283
16,023
Income tax provision
12,546
9,944
Depreciation and amortization expense
23,434
20,917
Loss on sale of assets, net (a)
125
111
Stock-based compensation expense (b)
6,932
7,116
Acquisition expenses (c)
864
1,414
Non-cash rent expense (d)
1,819
1,966
Other (f)
4,478
1,158
Adjusted EBITDA
$
96,663
$
85,649
Net revenues
$
277,913
$
261,656
Net income margin
12.3
%
10.3
%
Adjusted EBITDA margin
34.8
%
32.7
%
(a)
Consists of 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.
(b)
Represents non-cash expense associated with our stock-based compensation as well as related taxes.
(c)
Represents expenses incurred in strategic acquisitions and greenfield development. 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.
(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.
(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, nonrecurring strategic project costs, and fees related to the pending Merger Agreement.
Results of Operations for the Three Months Ended March 31, 2026 and 2025
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Net revenues
$
277,913
100
%
$
261,656
100
%
Costs and expenses
Cost of labor and chemicals
76,702
28
%
74,252
28
%
Other store operating expenses
113,319
41
%
109,667
42
%
General and administrative
28,756
10
%
24,659
9
%
Loss on sale of assets, net
125
0
%
111
0
%
Total costs and expenses
218,902
79
%
208,689
80
%
Operating income
59,011
21
%
52,967
20
%
Other expense
Interest expense, net
12,283
4
%
16,023
6
%
Total other expense
12,283
4
%
16,023
6
%
Income before taxes
46,728
17
%
36,944
14
%
Income tax provision
12,546
5
%
9,944
4
%
Net income
$
34,182
12
%
$
27,000
10
%
Net Revenues
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Net revenues
$
277,913
$
261,656
Dollar change compared to prior period
$
16,257
Percentage change compared to prior period
6
%
The increase in net revenues for the three months ended March 31, 2026 was primarily attributable to growth in UWC Members, favorable wash package mix, price increases, and the year-over-year addition of 31 locations.
Cost of Labor and Chemicals
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Cost of labor and chemicals
$
76,702
$
74,252
Percentage of net revenues
28
%
28
%
Dollar change compared to prior period
$
2,450
Percentage change compared to prior period
3
%
The increase in cost of labor and chemicals for the three months ended March 31, 2026 was primarily attributable to an increase in volumes and the year-over-year addition of 31 locations, as well as increased store labor rates, partially offset by labor and chemical optimization efforts.
Other Store Operating Expenses
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Other store operating expenses
$
113,319
$
109,667
Percentage of net revenues
41
%
42
%
Dollar change compared to prior period
$
3,652
Percentage change compared to prior period
3
%
The increase in other store operating expenses for the three months ended March 31, 2026 was primarily attributable to the year-over-year addition of 31 locations, increased utilities expenses, as well as additional rent expense for the addition of 19 net new land and building leases between periods.
The increase in general and administrative expenses for the three months ended March 31, 2026 was primarily attributable to fees associated with the pending merger and growth in marketing spend. These increases were partially offset by lower compensation expenses and other costs to support strategic growth initiatives.
Loss on Sale of Assets, Net
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Loss on sale of assets, net
$
125
$
111
Percentage of net revenues
0
%
0
%
Dollar change compared to prior period
$
14
Percentage change compared to prior period
13
%
The change in loss on sale of assets, net for the three months ended March 31, 2026 was primarily driven by increased losses associated with asset retirements in the current year.
Other Expense
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Other expense
$
12,283
$
16,023
Percentage of net revenues
4
%
6
%
Dollar change compared to prior period
$
(3,740
)
Percentage change compared to prior period
(23
)%
The decrease in other expense for the three months ended March 31, 2026 was attributable to a decrease in interest expense, net driven by lower average interest rates, $65.0 million of principal payments on the First Lien Term Loan, and an effective interest rate swap between periods.
Income Tax Provision
Three Months Ended March 31,
(Dollars in thousands)
2026
2025
Income tax provision
$
12,546
$
9,944
Percentage of net revenues
5
%
4
%
Dollar change compared to prior period
$
2,602
Percentage change compared to prior period
26
%
The increase in income tax provision for the three months ended March 31, 2026 was primarily driven by the increase in pre-tax income, tax benefits from discrete items in the prior year and unfavorable income tax impact from equity awards activity as compared to the prior year.
Our primary requirements for liquidity and capital are to fund our investments in our core business, which includes lease payments, pursue greenfield location development and acquisitions of new locations, and to service our indebtedness. Our primary sources of liquidity are cash provided by operations, sale-leaseback transactions, and utilization of our credit facilities.
As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $54.6 million and $28.5 million, respectively, and $299.9 million of available borrowing capacity under our Revolving Commitment, as of both dates.
For a description of our credit facilities and our recent debt refinancing, please see Note 8 Debt in the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. As of March 31, 2026, we were in compliance with the covenants under the Credit Agreement.
We believe that our existing sources of liquidity and capital will be sufficient to finance our growth strategy and operations, as well as planned capital expenditures, for at least the next 12 months and for the foreseeable future.
Cash Flows for the Three Months Ended March 31, 2026 and 2025
Operating Activities. For the three months ended March 31, 2026, net cash provided by operating activities was $79.7 million and was comprised of net income of $34.2 million, increased by $56.3 million as a result of non-cash adjustments including depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, loss on sale of assets, net, and amortization of debt issuance costs. Changes in working capital balances decreased cash provided by operating activities by $10.8 million and were primarily driven by operating lease payments partially offset by the change in timing of payment and receipt of receivables, payables, and accrued expenses.
For the three months ended March 31, 2025, net cash provided by operating activities was $87.6 million and was comprised of net income of $27.0 million, increased by $49.2 million as a result of non-cash adjustments including depreciation and amortization expense, stock-based compensation expense, non-cash lease expense, deferred income taxes, loss on sale of assets, net, and amortization of debt issuance costs. Changes in working capital balances increased cash provided by operating activities by $11.4 million and were primarily driven by decreases to accounts receivable, net, other receivables, inventory and other noncurrent assets and liabilities and increases in accounts payable, accrued expenses, and deferred revenue, partially offset by operating lease payments.
Investing Activities. For the three months ended March 31, 2026, net cash used in investing activities was $46.5 million and was primarily comprised of investments in property and equipment to support our greenfield development and other initiatives, offset by the sale of property and equipment.
For the three months ended March 31, 2025, net cash used in investing activities was $55.0 million and was primarily comprised of investments in property and equipment to support our greenfield development and other initiatives, offset by the sale of property and equipment.
Financing Activities. For the three months ended March 31, 2026, net cash used in financing activities was $6.8 million and was primarily comprised of payments for the First Lien Term Loan and finance lease obligations, partially offset by proceeds related to the issuance of common stock under employee plans.
For the three months ended March 31, 2025, net cash used in financing activities was $60.9 million and was primarily comprised of payments for the First Lien Term Loan and finance lease obligations, partially offset by proceeds related to the issuance of common stock under employee plans.
Free Cash Flow
Free cash flow and free cash flow excluding growth capital expenditures are non-GAAP liquidity measures used by management as additional cash flow metrics. Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment in a period. Free cash flow excluding growth capital expenditures is defined as operating cash flows less purchases of maintenance property and equipment. Free cash flow includes the impact of capital expenditures, providing a supplemental view of cash generation. Free cash flow excluding growth capital expenditures includes purchases of property and equipment in a period, which are uses of cash that are necessary to maintain the Company's existing business operations, including its washes and support functions. Free cash flow excluding growth capital expenditures provides a supplemental view of cash flow generation before investments in growth capital, which expand future business operations, including the opening or improvement of washes and service capabilities. Free cash flow and free cash flow excluding growth capital expenditures have certain limitations, including that they do
not reflect adjustments for certain non-discretionary cash expenditures, such as mandatory debt repayments or payments made for business acquisitions.
The following is a reconciliation of free cash flow and free cash flow excluding growth capital expenditures to net cash provided by operating activities for the periods presented.
Three Months Ended March 31,
2026
2025
Net cash provided by operating activities
$
79,660
$
87,550
Adjustments:
Less: Maintenance capital expenditures
(5,542
)
(10,461
)
Free cash flow excluding growth capital expenditures
74,118
77,089
Less: Growth capital expenditures
(41,144
)
(44,620
)
Free cash flow
$
32,974
$
32,469
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and estimates based on the facts and circumstances. Actual results could differ from those estimates.
The significant accounting policies and estimates used in preparation of the consolidated financial statements are described in our 2025 Form 10-K. There have been no material changes to our significant accounting policies during the three months ended March 31, 2026.
Recent Accounting Pronouncements
See Note 2 Summary of Significant Accounting Policies to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our exposure to market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Form 10-K.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our President and Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026 and concluded our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Except as set forth in Note 14 Commitments and Contingencies to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes to the legal proceedings described in Part I Item 3. “Legal Proceedings” and Note 18 Commitments and Contingencies to the consolidated financial statements of our 2025 Form 10-K.
Item 1A. Risk Factors.
There have been no material changes to the risk factors described in Part I. Item 1A. "Risk Factors" of our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plan Arrangements
During the three months ended March 31, 2026, none of the directors or officers of the Company adopted, modified or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as those terms are defined under Item 408 of Regulation S-K.
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*
* Filed herewith.
** Furnished herewith.
† Indicates management contract or compensatory plan.
+ Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Mister Car Wash, Inc.
Date: May 1, 2026
By:
/s/ John Lai
John Lai
Chairperson, President and Chief Executive Officer
