Mister Car Wash, Inc. ( MCW 0.89% )
Q4 2021 Earnings Call
Mar 24, 2022, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, and welcome to Mister Car Wash’s conference call to discuss financial results for the fourth quarter fiscal 2021. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Please note that this call is being recorded, and a reproduction of this call in whole or in part is not permitted without written authorization from the company.
I would now like to turn the call over to Megan Everett, senior director of communications. Please go ahead, ma’am.
Megan Everett — Senior Director of Investor Relations
Thank you. Good afternoon, everyone, and thank you for joining us today for Mister Car Wash’s fourth-quarter fiscal year 2021 earnings call. Speaking today are Chairperson and Chief Executive Officer John Li and Chief Financial Officer Jed Gold. After John and Jed have made their formal remarks, we will open the call to questions.
Before we begin, I do need to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company’s actual results to differ materially from management’s current expectations. These statements speak as of today. And except as may be required by law, the company does not have any obligation to update or revise such statements if circumstances change. During the call today, management will also refer to certain non-GAAP financial measures.
A reconciliation between the GAAP and non-GAAP financial measures can be found in the company’s earnings press release issued earlier today and posted to the Investor Relations section of Mister Car Wash’s website at ir.mrcarwash.com. With that, I’ll turn the call over to John. John?
John Lai — Chief Executive Officer
Thanks, Megan. Good afternoon, everyone, and thanks for joining us on our fourth quarter and year-end earnings call. We had another great quarter and an extraordinary year that we’re excited to share with you. But before I dive in, I’d like to zoom out and talk about the growing nature of our market, some of the trends we’re seeing across the industry, and how we execute and deliver best-in-class unit-level results.
Big picture, the U.S. car park is huge and growing, with approximately 285 million vehicles on the road today. When we look at the size of the market, the pond is not only very large but it’s expanding as more consumers come into the category, driven by the ease, convenience, and tremendous value of the drive-thru express car wash model. More importantly, we’re seeing consumption rising as more people sign up to become members of our subscription-based Unlimited Wash Club program, which has made it easy and affordable to keep their cars clean all the time while protecting their investment.
Even in the face of inflation and rising gas prices, we believe that the joy customers receive from keeping the car clean, coupled with the relative affordability of our service, has created a strong tailwind for expansion. As the largest car wash operator in the United States with less than 5% market share, we believe we’re in a great position to expand our footprint by increasing penetration in existing markets while continuing to look for new markets to move into. In short, when we look at the size of our industry, we see demand outpacing supply, which has created a huge growth opportunity for us. The biggest differentiators are people and the amazing team we’ve developed that delivers an elevated level of hospitality across the entire company.
As service providers, we take great pride in our service delivery model, which has become arguably our biggest competitive advantage. We talk a lot about technology and systems and the procedures we use to consistently wash lots of cars, but it’s our people-first culture that we’ve developed at scale that’s the real key to our success. Watching our teams process 200 cars per hour in a smooth and seamless way is like watching a well-choreographed dance with everyone moving in synchronicity. The perpetual motion of our crews working in unison with a skip in their step and a shared purpose is what makes our company very special.
And this results in incredibly strong AUVs and customer satisfaction. During 2021, I’m delighted to share that our full-year revenue increased 31.9% to over $750 million and EBITDA of over $254 million. From a unit-level standpoint, we grew our footprint by 55 stores, acquiring 38 locations and opening up 17 greenfields. This set a record for the single biggest year in unit growth in the history of our company.
On the M&A front, late in the fourth quarter of last year, we closed two strategic acquisitions, Clean Streak, and the Downtowner, that significantly bolstered our position in Florida. We now have 65 locations in Florida and plan on opening at least 10 more before the end of the year. Greenfields are one of the most important pieces of our growth strategy, and we’re thrilled with how well they’re performing. We’ve leveraged all the knowledge we picked up over the years and have developed a car wash model that’s all about throughput and volume.
We’re investing heavily in our new store development and construction teams and see significant opportunities to accelerate our greenfield openings in 2022 and beyond. For the full year, we washed over 75 million vehicles and ended the year with nearly 1.7 million Unlimited Wash Club members. We continue to see healthy membership growth as more and more customers see the value in keeping their cars clean all the time, which has fundamentally changed the way people care for their vehicles. We achieved exceptional results by hiring great people, paying them well, and, most importantly, treating them well.
We invest heavily in training. And as a company on the rise, we’re in constant leadership development mode as we build out our bench of future managers. In our last earnings call, we talked about the recent launch of our certified trainer program and our operations leadership program. To date, more than 200 team members have completed the training, and this is providing a clear stepping stone for those looking to take on more responsibility within our company.
At a time when companies are struggling to staff their operations, we feel very fortunate that we’ve had no interruptions to our business, and our stores are continuing to become even more productive as we set volume records in almost every region. In the second half of last year, we moved to get out in front of the labor challenges that everyone is experiencing right now by increasing hourly wages to retain and attract talented team members. Our path of being a people-centric company began many years ago and the ongoing investments we’ve made in wages, benefits, training, and career path progression have put us in a great position during this tough labor environment. On the executive leadership front, I’d like to recognize the retirement of Dave Hail, our VP of development, who decided after 20 years with Mister and over 40 years in the industry, it was time to ride off into the sunset and spend some quality time with his family.
From everyone at Mister Car Wash, I want to say thank you to Dave and wish him happiness. Over the last two years, Dave has been grooming his successor, Ryan Darby, to take over. And I’m happy to report that Ryan and his team are doing a phenomenal job building beautiful stores and increasing our capacity to open up even more. I’m also thrilled to announce the promotion of Myra Chimienti as our new chief operating officer.
Myra is a 14-year veteran at Mister Car Wash and has served as VP of ops services prior to being promoted to a new role. The fact that she’s a female and a Latina in a predominantly male-dominated industry is also pretty cool. Before I turn it over to Jed, I’d like to thank our entire team who has done an amazing job scaling our company and elevating our culture, especially our field and HQ teams, who have been working so hard to deliver on our mission to deliver the best car wash experience. We couldn’t do it without our people and are grateful to have the best team in the industry.
I’d like to now turn it over to Jed to review our fourth quarter and 2021 financial results.
Jed Gold — Chief Financial Officer
Thank you, John, and good afternoon, everyone. 2021 was a record year on many levels. And as John indicated, we’re pleased so far with our strong start to 2022. Before going through our results and 2022 guidance, I want to make three comments to help you better understand some of the broader trends in our business.
First is around demand. Underlying demand was strong during the fourth quarter. We did see some variability in the middle of the quarter related to weather, specifically impacting our retail sales, but that worked itself out in December and the trends have remained strong. The second is around input inflation and pricing.
As we discussed on our last earnings call, we proactively adjusted hourly labor rates in August of 2021, and that resulted in some modest labor inflation in the fourth quarter. To offset this, we took a modest price increase in our retail wash offerings across the majority of our locations in November. We are happy to report that since December, the increase in pricing has basically offset the increase in labor inflation. But the fourth quarter did experience a little bit of margin compression based on the timing of these two events.
More importantly, these investments have helped keep our employee turnover relatively flat since the middle of last year, and we’re also seeing improvements in labor productivity measures, such as cars washed per labor…
Read More: Mister Car Wash, Inc. (MCW) Q4 2021 Earnings Call Transcript | The Motley Fool