Mister Car Wash IPO Filing Shows Subscribers

Now that’s a lot of soap and polish. 

All manner of companies are debuting on various U.S. exchanges, with anticipation, perhaps, continuation of the economic “snapback” — and that consumers will continue to spend.

In this case, they’d be spending to keep their new autos in fine fettle.

Mister Car Wash, which — as the name might imply — owns and operates car washes across the U.S. (more than 340 of them across 21 states), filed to go public this past week.

With an initial public offering (IPO) on the New York Stock Exchange that would be worth about $638 million, and with a valuation of more than $5 billion.

As per the firm’s S-1 filing with the Securities and Exchange Commission, the company washed 59.6 million cars through the trailing 12 months that ended March 31. The company also stated that it offers a monthly subscription program, Unlimited Wash Club (UWC), billed as “a flexible, quick and convenient option for customers to keep their cars clean.”

Mister Car Wash said that at the end of the first quarter, the company had 1.4 million UWC members, and the subscriptions comprised 62 percent of total wash sales in the latest period, and 68 percent of the total wash volume.

Sensory Experience 

“Getting your car washed is fun and the sensory experience within our tunnels creates a magic, feel-good moment,” according to the filing. “We often refer to our stores as the stage and our tunnels the show where all our people play a part in our interactive and dynamic experience.”

Against that backdrop, the company has enjoyed comp store sales growth that was consistently positive up until 2020, when the pandemic hit, and that metric dropped by 11 percent. Even counting that slide, the 11.3 year average was seven percent, and in the first quarter, comp growth was 19 percent.

The subscription model has growth significantly, comprising just 15 percent of total wash sales in 2010 to the current majority of sales.

At a high level, the car wash industry in the U.S. is an $11 billion market — and Mister Car Wash operates in the automated slices of this market, which is 70 percent of that $11 billion tally.  The number of registered vehicles in the United States continues to grow and has increased from approximately 250 million vehicles in 2010 to approximately 273 million as of 2020, according to the filing. The company said that the market is fragmented, and that its 344 store count represents fewer than 5 percent of the locations in the U.S.

In terms of technological differentiators, the company also features automatic scanning RFID tags for UWC members, as well as proprietary cleaning and drying products, “including our Unity Chemistry, Dynamic Dry and patented HotShine wax system. We believe our products and technology result in a superior clean, driving customer satisfaction,” the company said. “Our online tools and mobile app allow customers to quickly and conveniently” pre-purchases washes.

The growth in UWC members, on a per-location basis, has been about 24 percent CAGR , since 2016. Net revenues in the latest quarter stood at $175 million, up from $155 million last year, while operating income grew to $46.9 million from $25.9 million a year ago.