Mister Car Wash Reports Mixed Q2 Results, Provides Long-Term Guidance

Shares of Mister Car Wash, Inc. (MCW) were down almost 1.5% in Thursday’s extended trading session after the company delivered mixed debut second-quarter earnings results since its IPO in June.

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Mister Car Wash is the largest car wash company in the United States, with over 350 locations across 21 states. Currently, the company has a market capitalization of about $6.1 billion.

Revenues jumped 93% year-over-year to $197.1 million compared to $101.9 million in the prior-year quarter. The increase in revenues reflected a 93% surge in comparable stores sales, as well as a 39% increase in Unlimited Wash Club (UWC) members to 1.5 million.

However, the company reported a net loss of $0.42 per share in Q2 versus a loss of $0.03 per share in the prior-year period.

Markedly, the company opened seven new stores during the second quarter. (See Mister Car Wash stock charts on TipRanks)

Mister Car Wash CEO John Lai commented, “Upon entering our next chapter as a public company, we continue to see significant growth ahead as we capitalize on the strong fundamentals of our business as well as on the highly fragmented and resilient industry in which we operate.”

Lai further added, “We believe we are well positioned to continue driving sustainable profitable growth in the years ahead as our team continues to deliver exceptional service, providing our customers not only the best car wash, but a fast, smooth and seamless experience.”

Mister Car Wash Provides FY2021 and Long Term Guidance

Based on the robust Q2 revenue growth, management provided guidance for Fiscal 2021, as well as their long-term outlook.

For FY2021, revenues are forecast to grow 30%, with a comparable stores sales growth range of 29% to 33%. The company also expects adjusted earnings in the range of $0.39 to $0.44 per share.

Furthermore, the company plans to launch 16 – 18 new greenfield locations during the second half of the year.

Over the long-term, the topline is forecast to increase by high-single-digits, with mid-single-digit growth in comparable-store sales. Additionally, the company aims to achieve high-single-digit annual unit growth and plans to open 50 additional locations over the next five years.

Bank of America Securities recently initiated coverage of Mister Car Wash with a Hold rating and a price target of $23 (13.9% upside potential).

The analyst commented, “As of 2020, more than 60% of MCW’s revenue was attributable to its Unlimited Wash Club (UWC) subscription program, and the company’s subscription base continues to climb. This has resulted in a consistent, recurring revenue stream and EBITDA margins well above auto aftermarket peers. Mister has honed its car wash process and branding over time, and can now drive future growth through a combination of acquisitions and new store greenfields.”

Overall, the stock has a Moderate Buy consensus rating based on 3 Buys and 5 Holds. The average Mister Car Wash price target of $23.63 implies 17% upside potential from current levels.