Mister Car Wash, Inc. (NYSE:MCW) Q4 2022 Earnings Call Transcript

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The team on the ground is doing an amazing job. And as we have focused on three different kind of clustered MSAs, the Cape Coral, Fort Myers market was first. We are now getting very, very close to pulling the trigger in the Tampa St. Pete market. And then shortly after that, we are going to be ready to go in the Orlando, Central Florida pocket. So, we will probably be fully integrated here midyear, then start seeing the lift that we were hoping for. So again, this one has taken a little longer than we anticipated. On the California acquisitions, these were three beautiful tuck-ins in the Central Valley where we are very, very strong. California is our third largest market, and we are rocking and rolling right now. There is a huge car culture in California, and they love to keep their cars clean, and we are happy to wash them.

So, we are kicking back there. It was a little bit of a wet period, as I think everyone knows, California went through a really unseasonably wet December/January. But now that the clouds are cleared, it’s €“ we are set up nicely for what we hope to be a great summer, which is when their peak demand period is. So, strengthening our position in California made a ton of sense, and it kind of speaks back to our M&A strategy, where we are going to do strategic bolt-ons to increase our penetration and further densify and progress the markets that we are in and the markets that we just don’t only want to protect, but we want to be proactively on the offense in.

Kate McShane: Thank you.

Operator: Our next question will come from David Bellinger with ROTH MKM. Please go ahead.

David Bellinger: Hey John and Jed. Thanks for taking the question. So earlier, you mentioned the app rollout and trying to improve retention rates. So, can you just tell us where average retention times are now sitting? And maybe talk about the potential benefits you could get from keeping the customer just for one extra month and what that could mean in terms of upside and incremental profitability if you are able to attain that?

John Lai: Yes. So, we don’t share that as a KPI, just because we don’t want to fault trap to that. It’s a singular KPI and there is a whole lot of other metrics that we look at when we evaluate our EWC program. I will say this, though, that our member retention rates are growing from a length standpoint. And again, that speaks to the stickiness of the program. And so the longer they are on the program, the better that goes without saying. And so we are moving that needle in the right direction. But with respect to the app and the opportunity for us to improve engagement, since it just launched last night, we don’t have a lot of data to share with you. But there is going to be, again, a lot of cool functions that we will roll out here over the next several months. And again, the objective is over time that, that number becomes even more sticky.

Jed Gold: And David, just a data point to help you think through that right. So, if you look at the blended average on the EWC program, I mean one additional month and what it’s going to mean, right. One additional month for a customer, it’s roughly $25 per month for that customer. So customer retention, this is an opportunity for us. And we believe the app that John had mentioned is going to help with that as we look to going forward.

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