FORWARD-LOOKING STATEMENTS

PART I—FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

PART I—FINANCIAL INFORMATION

Basis of Presentation

Use of Estimates

Accounts Receivable, Net

Other Receivables

Prepaid Expenses and Other Current Assets

Inventory, Net

Derivative Financial Instruments

Revenue Recognition

Employee Retention Credit

Recent Accounting Pronouncements

Amended and Restated First Lien Credit Agreement

First Lien Term Loan

Revolving Commitment

Standby Letters of Credit

Covenants

Basis of Presentation

Use of Estimates

Accounts Receivable, Net

Other Receivables

Prepaid Expenses and Other Current Assets

Inventory, Net

Derivative Financial Instruments

Revenue Recognition

Earnings Per Share

Employee Retention Credit

Recent Accounting Pronouncements

Amended and Restated First Lien Credit Agreement

First Lien Term Loan

Revolving Commitment

Standby Letters of Credit

Covenants

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	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.

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 October 23, 2025, the registrant had 327,568,371 shares of common stock, $0.01 par value per share, outstanding.

MISTER CAR WASH, INC.

TABLE OF CONTENTS


Forward-Looking Statements		2

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	3
	Consolidated Statements of Operations and Comprehensive Income	3
	Consolidated Statements of Cash Flows	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Stockholders' Equity	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

Signatures		30

Table of Contents

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, including, but 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, 2024 (the “2024 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.

Table of Contents

Item 1. Financial Statements.

Mister Car Wash, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in thousands, except share and per share data)	2025			2024			2025			2024
Net revenues	$	263,417		$	249,329		$	790,488		$	743,555

Costs and expenses
Cost of labor and chemicals		76,581			73,617			227,460			217,966
Other store operating expenses		109,531			102,607			328,048			298,953
General and administrative		22,693			25,436			72,465			80,058
(Gain) loss on sale of assets, net		2,759			(1,916	)		3,549			(552	)
Total costs and expenses		211,564			199,744			631,522			596,425
Operating income		51,853			49,585			158,966			147,130

Other (income) expense
Interest expense, net		14,054			20,653			45,249			60,931
Loss on extinguishment of debt		—			—			—			1,882
Other income		—			—			(21	)		(5,189	)
Total other expense, net		14,054			20,653			45,228			57,624
Income before taxes		37,799			28,932			113,738			89,506
Income tax provision		10,388			6,590			30,732			28,436
Net income	$	27,411		$	22,342		$	83,006		$	61,070

Other comprehensive income, net of tax
Gain (loss) on interest rate swap		(266	)		—			84			—
Total comprehensive income	$	27,145		$	22,342		$	83,090		$	61,070

Earnings per share
Basic	$	0.08		$	0.07		$	0.25		$	0.19
Diluted	$	0.08		$	0.07		$	0.25		$	0.19
Weighted-average common shares outstanding
Basic		327,389,467			321,917,525			325,728,763			319,067,596
Diluted		332,359,175			329,299,326			331,899,189			329,222,641

See accompanying notes to consolidated financial statements.

Table of Contents

Mister Car Wash, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(Amounts in thousands)	2025			2024
Cash flows from operating activities
Net income	$	83,006		$	61,070
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization expense		65,055			61,038
Stock-based compensation expense		19,893			18,843
(Gain) loss on sale of assets, net		3,549			(552	)
Loss on extinguishment of debt		—			1,882
Amortization of deferred debt issuance costs		865			961
Non-cash lease expense		41,198			36,557
Deferred income tax		28,785			25,842
Changes in assets and liabilities
Accounts receivable, net		(1,888	)		3,469
Other receivables		1,372			(7,012	)
Inventory, net		344			3,461
Prepaid expenses and other current assets		1,509			(605	)
Accounts payable		7,692			11,629
Accrued expenses		7,242			11,850
Deferred revenue		2,704			1,954
Operating lease liability		(35,875	)		(31,811	)
Other noncurrent assets and liabilities		282			264
Net cash provided by operating activities	$	225,733		$	198,840

Cash flows from investing activities
Purchases of property and equipment		(178,654	)		(259,896	)
Proceeds from sale of property and equipment		6,851			36,431
Net cash used in investing activities	$	(171,803	)	$	(223,465	)

Cash flows from financing activities
Proceeds from issuance of common stock under employee plans		4,116			3,742
Payments of tax withholding on option exercises		—			(19,290	)
Proceeds from debt borrowings		—			925,000
Proceeds from revolving line of credit		—			186,000
Payments on debt borrowings		(89,307	)		(903,513	)
Payments on revolving line of credit		—			(164,000	)
Payments of deferred debt issuance costs		—			(5,257	)
Principal payments on finance lease obligations		(585	)		(552	)
Net cash provided by (used in) financing activities	$	(85,776	)	$	22,130

Net change in cash and cash equivalents and restricted cash during period		(31,846	)		(2,495	)
Cash and cash equivalents and restricted cash at beginning of period		67,612			19,119
Cash and cash equivalents and restricted cash at end of period	$	35,766		$	16,624

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents		35,652			16,478
Restricted cash, included in prepaid expenses and other current assets		114			146
Total cash, cash equivalents, and restricted cash	$	35,766		$	16,624

Supplemental disclosure of cash flow information
Cash paid for interest	$	46,730		$	60,436
Cash paid for income taxes	$	2,296		$	2,267

Supplemental disclosure of non-cash investing and financing activities
Property and equipment in accounts payable	$	9,285		$	17,352
Property and equipment accrued in other accrued expenses	$	3,817		$	—
Stock option exercise proceeds in other receivables	$	—		$	1

See accompanying notes to consolidated financial statements.

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Mister Car Wash, Inc.

Consolidated Balance Sheets

(Unaudited)


	As of
(Amounts in thousands, except share and per share data)	September 30, 2025		December 31, 2024
Assets
Current assets
Cash and cash equivalents	$	35,652	$	67,463
Accounts receivable, net		2,679		791
Other receivables		14,451		13,518
Inventory, net		5,384		5,728
Prepaid expenses and other current assets		10,598		11,590
Total current assets		68,764		99,090
Property and equipment, net		915,508		814,600
Operating lease right of use assets, net		901,631		924,896
Other intangible assets, net		111,119		112,507
Goodwill		1,134,734		1,134,734
Other assets		11,174		15,969
Total assets	$	3,142,930	$	3,101,796

Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	36,084	$	30,020
Accrued payroll and related expenses		30,164		27,116
Other accrued expenses		37,626		39,162
Current maturities of long-term debt		—		6,920
Current maturities of operating lease liability		52,330		48,986
Current maturities of finance lease liability		857		804
Deferred revenue		36,664		33,960
Total current liabilities		193,725		186,968
Long-term debt, net		827,231		909,094
Operating lease liability		871,296		890,613
Financing lease liability		12,575		13,262
Deferred tax liabilities, net		130,554		101,741
Other long-term liabilities		2,392		1,766
Total liabilities		2,037,773		2,103,444
Stockholders’ equity
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 327,532,052 and 323,693,863 shares outstanding as of September 30, 2025 and December 31, 2024, respectively		3,281		3,242
Additional paid-in capital		853,940		830,264
Accumulated other comprehensive income		84		—
Retained earnings		247,852		164,846
Total stockholders’ equity		1,105,157		998,352
Total liabilities and stockholders’ equity	$	3,142,930	$	3,101,796

See accompanying notes to consolidated financial statements.

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Mister Car Wash, Inc.

Consolidated Statements of Stockholders’ Equity

(Amounts in thousands, except share and per share data)

(Unaudited)

Nine Months Ended September 30, 2025


	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings		Stockholders’ Equity
	Shares		Amount
Balance as of December 31, 2024		323,693,863	$	3,242	$	830,264		$	—		$	164,846	$	998,352
Stock-based compensation expense		—		—		6,843			—			—		6,843
Vesting of restricted stock units		137,425		1		(1	)		—			—		—
Exercise of stock options		983,150		11		1,689			—			—		1,700
Net income		—		—		—			—			27,000		27,000
Balance as of March 31, 2025		324,814,438	$	3,254	$	838,795		$	—		$	191,846	$	1,033,895
Stock-based compensation expense		—		—		6,477			—			—		6,477
Issuance of common stock under employee plans		188,893		2		1,233			—			—		1,235
Vesting of restricted stock units		1,697,973		17		(17	)		—			—		—
Exercise of stock options		556,243		5		426			—			—		431
Gain on interest rate swap		—		—		—			350			—		350
Net income		—		—		—			—			28,595		28,595
Balance as of June 30, 2025		327,257,547	$	3,278	$	846,914		$	350		$	220,441	$	1,070,983
Stock-based compensation expense		—		—		6,573			—			—		6,573
Exercise of stock options		274,505		3		453			—			—		456
Loss on interest rate swap		—		—		—			(266	)		—		(266	)
Net income		—		—		—			—			27,411		27,411
Balance as of September 30, 2025		327,532,052	$	3,281	$	853,940		$	84		$	247,852	$	1,105,157

Nine Months Ended September 30, 2024


	Common Stock						Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings		Stockholders’ Equity
	Shares			Amount
Balance as of December 31, 2023		315,192,401		$	3,157		$	817,271		$	—	$	94,607	$	915,035
Stock-based compensation expense		—			—			6,246			—		—		6,246
Vesting of restricted stock units		139,409			1			(1	)		—		—		—
Exercise of stock options		4,116,291			42			704			—		—		746
Tax withholding on option exercises		(1,613,019	)		(16	)		(9,924	)		—		—		(9,940	)
Net income		—			—			—			—		16,637		16,637
Balance as of March 31, 2024		317,835,082		$	3,184		$	814,296		$	—	$	111,244	$	928,724
Stock-based compensation expense		—			—			5,906			—		—		5,906
Issuance of common stock under employee plans		232,136			2			1,411			—		—		1,413
Vesting of restricted stock units		1,114,106			11			(11	)		—		—		—
Exercise of stock options		3,599,539			36			625			—		—		661
Tax withholding on option exercises		(1,385,675	)		(13	)		(9,382	)		—		—		(9,395	)
Net income		—			—			—			—		22,091		22,091
Balance as of June 30, 2024		321,395,188		$	3,220		$	812,845		$	—	$	133,335	$	949,400
Stock-based compensation expense		—			—			6,691			—		—		6,691
Exercise of stock options		843,952			8			962			—		—		970
Net income		—			—			—			—		22,342		22,342
Balance as of September 30, 2024		322,239,140		$	3,228		$	820,498		$	—	$	155,677	$	979,403

See accompanying notes to consolidated financial statements.

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Mister Car Wash, Inc.

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 September 30, 2025, we operated 527 car washes in 21 states.

2. Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 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, 2024 included in the 2024 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 and nine months ended September 30, 2025 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.

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 are presented net of an allowance for doubtful accounts of $148 and $123 as of September 30, 2025 and December 31, 2024, respectively. The activity in the allowance for doubtful accounts was immaterial for the three and nine months ended September 30, 2025 and 2024.

Other receivables consisted of the following for the periods presented:


	As of
	September 30, 2025		December 31, 2024
Payroll tax withholding and exercise proceeds receivable	$	—	$	834
Construction receivable		4,174		4,584
Income tax receivable		1,193		1,864
Insurance receivable		5,341		4,250
Other		3,743		1,986
Total other receivables	$	14,451	$	13,518

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Prepaid expenses and other current assets consisted of the following for the periods presented:


	As of
	September 30, 2025		December 31, 2024
Spare parts	$	3,929	$	4,801
Prepaid insurance		1,873		2,658
Other		4,796		4,131
Total prepaid expenses and other current assets	$	10,598	$	11,590

Inventory consisted of the following for the periods presented:


	As of
	September 30, 2025			December 31, 2024
Chemical washing solutions	$	5,427		$	5,831
Other		67			14
Total inventory, gross		5,494			5,845
Reserve for obsolescence		(110	)		(117	)
Total inventory, net	$	5,384		$	5,728

The activity in the reserve for obsolescence was immaterial for the three and nine months ended September 30, 2025 and 2024.

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 8-Fair Value Measurements and Note 9-Interest Rate Swap for additional information.

The following table summarizes the composition of our net revenues for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Recognized over time	$	203,293	$	184,725	$	595,332	$	545,066
Recognized at a point in time		59,692		64,441		194,293		198,148
Other revenue		432		163		863		341
Net revenues	$	263,417	$	249,329	$	790,488	$	743,555

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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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator
Net income	$	27,411	$	22,342	$	83,006	$	61,070

Denominator
Weighted-average common shares outstanding - basic		327,389,467		321,917,525		325,728,763		319,067,596
Effect of potentially dilutive securities
Stock options		3,039,335		5,562,479		3,710,846		8,585,621
Restricted stock units		1,907,438		1,763,531		2,449,938		1,540,123
Stock purchase rights		22,935		55,791		9,642		29,301
Weighted-average common shares outstanding - diluted		332,359,175		329,299,326		331,899,189		329,222,641

Earnings per share - basic	$	0.08	$	0.07	$	0.25	$	0.19
Earnings per share - diluted	$	0.08	$	0.07	$	0.25	$	0.19

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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Stock options		6,358,906		5,209,783		5,382,773		4,343,090
Restricted stock units		—		—		469,852		445,641
Stock purchase rights		26		—		27,538		32,905

In response to the COVID-19 pandemic, the Employee Retention Credit (“ERC”), was established under the Coronavirus Aid, Relief, and Economic Security Act. The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer paid to employees from March 13, 2020 to December 31, 2020. Companies who meet the eligibility requirements can claim the ERC on an original or adjusted employment tax return for a period within those dates.

In March 2024, we determined that we qualified for and recognized $4,663 (net of tax advisory costs) in relief for the period from March 13, 2020 to December 31, 2020. Upon receipt of the credit, we will owe an immaterial amount for tax advisory costs associated with the assessment of the tax credit. As there is no authoritative guidance under U.S. GAAP for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standards 20, or IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance of receipt of the identified ERC amount and recorded the credit in other income on our consolidated statements of operations and comprehensive income.

As of September 30, 2025 and December 31, 2024, the tax credit receivable was $2,125 and $4,663, respectively. As of September 30, 2025 and December 31, 2024, these amounts are included in other receivables and other assets, respectively, on our consolidated balance sheets.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The adoption of this ASU will be reflected in the Company's annual financial statements for the year ending December 31, 2025, and is not expected to have a material impact on our consolidated financial statements.

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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.

3. Property and Equipment, Net

Property and equipment, net consisted of the following for the periods presented:


	As of
	September 30, 2025			December 31, 2024
Land	$	135,538		$	123,550
Buildings and improvements		402,367			328,664
Finance leases		16,497			16,554
Leasehold improvements		167,269			151,635
Vehicles and equipment		372,308			353,660
Furniture, fixtures and equipment		105,538			106,271
Construction in progress		90,589			61,153
Property and equipment, gross		1,290,106			1,141,487
Accumulated depreciation		(369,667	)		(322,676	)
Accumulated amortization - finance leases		(4,931	)		(4,211	)
Property and equipment, net	$	915,508		$	814,600

For the three months ended September 30, 2025 and 2024, depreciation expense was $21,700 and $19,682, respectively. For the nine months ended September 30, 2025 and 2024, depreciation expense was $62,938 and $55,754, respectively.

For the three months ended September 30, 2025 and 2024, amortization expense on finance leases was $242 and $254, respectively. For the nine months ended September 30, 2025 and 2024, amortization expense on finance leases was $729 and $756, respectively.

During the second quarter of 2025, the Company sold a car wash location that was classified as held for sale. Based on the net proceeds of the sale, a gain of $338 was recorded during the second quarter of 2025. The gain was recorded in (gain) loss on sale of assets, net on the consolidated statements of operations and comprehensive income for the nine months ended September 30, 2025.

As of September 30, 2025, 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:


	September 30, 2025				December 31, 2024
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Trade names and trademarks	$	107,000	$	—	$	107,000	$	—
Customer relationships		9,700		7,369		9,700		7,019
Covenants not to compete		6,940		5,152		13,230		10,404
Other intangible assets, net	$	123,640	$	12,521	$	129,930	$	17,423

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For the three months ended September 30, 2025 and 2024, amortization expense associated with our finite-lived intangible assets was $458 and $1,246, respectively. For the nine months ended September 30, 2025 and 2024, amortization expense associated with our finite-lived intangible assets was $1,388 and $4,528, respectively.

As of September 30, 2025, estimated future amortization expense was as follows:


Fiscal Year Ending:
2025 (remaining three months)	$	439
2026		1,585
2027		758
2028		433
2029		310
Thereafter		594
Total estimated future amortization expense	$	4,119

5. Other Accrued Expenses

Other accrued expenses consisted of the following for the periods presented:


	As of
	September 30, 2025		December 31, 2024
Utilities	$	7,192	$	6,685
Accrued tax expense		14,947		11,485
Insurance expense		6,532		4,843
Greenfield development accruals		3,817		9,653
Other		5,138		6,496
Total other accrued expenses	$	37,626	$	39,162

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 September 30, 2025 and December 31, 2024.

6. Income Taxes

The effective income tax rates on continuing operations for the nine months ended September 30, 2025 and 2024 were 27.0% and 31.8%, 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 nine months ended September 30, 2025 included taxes on earnings at an anticipated annual effective tax rate of 25.5% and a net, unfavorable tax impact of $1,782 related primarily to discrete tax expense originating from stock options exercised during the nine months ended September 30, 2025.

The year-to-date provision for income taxes for the nine months ended September 30, 2024 included taxes on earnings at an anticipated annual effective tax rate of 25.5% and a net, unfavorable tax impact of $5,652 related primarily to discrete tax expense originating from stock options exercised during the nine months ended September 30, 2024.

On July 4, 2025, the "One Big Beautiful Bill Act” (the "OBBBA") was signed into law. The OBBBA includes tax reform provisions including 100% bonus depreciation, full expensing of domestic research expenditures, and modifications to interest expense limitations. After initial evaluation, the Company does not currently expect these laws to have a material effect on tax expense or the anticipated annual effective tax rate. We expect certain provisions effective for the 2025 tax year will decrease current and future cash taxes paid on the consolidated financial statements.

For the nine months ended September 30, 2025 and 2024, we recorded $62 and $406, respectively, related to unrecognized tax benefits or interest and penalties related to any uncertain tax positions.

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7. Debt

Long-term debt consisted of the following as of the periods presented:


				As of
	Maturity	Stated Interest Rate	Effective Interest Rate	September 30, 2025			December 31, 2024
Credit agreement
First lien term loan	March 27, 2031	6.66%	6.93%	$	831,074		$	920,381
Unamortized discount and debt issuance costs					(3,843	)		(4,367	)
Current maturities of debt					—			(6,920	)
Total long-term portion of debt, net				$	827,231		$	909,094

As of September 30, 2025, there are no payments required until the maturity date.

As of September 30, 2025 and December 31, 2024, total unamortized discount and debt issuance costs were $5,438 and $6,304, respectively, and accumulated amortization of debt issuance costs was $1,742 and $4,018, respectively.

For the three months ended September 30, 2025 and 2024, the amortization of debt issuance costs in interest expense, net in the consolidated statements of operations and comprehensive income was approximately $292 and $248, respectively.

For the nine months ended September 30, 2025 and 2024, the amortization of debt issuance costs in interest expense, net in the consolidated statements of operations and comprehensive income was approximately $865 and $961, respectively.

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.

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.

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 September 30, 2025 and December 31, 2024, the available borrowing capacity under the Revolving Commitment was $299,926 and $299,791, respectively.

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 September 30, 2025 and December 31, 2024, the unused commitment fee was 0.20% and 0.25%, respectively.

As of September 30, 2025, 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

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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 September 30, 2025 and December 31, 2024, the amounts associated with outstanding letters of credit were $74 and $209, respectively.

As of September 30, 2025, we were in compliance with all covenants related to our long-term debt.

8. Fair Value Measurements

The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of September 30, 2025:


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets
Deferred compensation plan	$	7,387	$	7,387	$	—	$	—
Interest rate swap	$	112	$	—	$	112	$	—
Liabilities
Deferred compensation plan	$	4,551	$	4,551	$	—	$	—
Contingent consideration	$	4,328	$	—	$	—	$	4,328

The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2024:


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets
Deferred compensation plan	$	6,487	$	6,487	$	—	$	—
Liabilities
Deferred compensation plan	$	4,425	$	4,425	$	—	$	—
Contingent consideration	$	4,328	$	—	$	—	$	4,328

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 9 Interest Rate Swap for additional information on the interest rate swap.

As of September 30, 2025, and December 31, 2024, 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 September 30, 2025 and December 31, 2024, 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 September 30, 2025. No payments were made during the three and nine months ended September 30, 2025 and 2024.

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During the three and nine months ended September 30, 2025 and 2024, there were no transfers between fair value measurement levels.

9. 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 September 30, 2025, information pertaining to the Swap is as follows:


Notional Amount		Fair Value		Pay-Fixed	Receive-Floating	Maturity Date
$	250,000	$	112	3.369%	4.163%	June 30, 2027

As of September 30, 2025 and December 31, 2024, the current portion of the fair value of the Swap was $550 and $0, respectively, and is included in prepaid and other current assets in the accompanying consolidated balance sheets.

As of September 30, 2025 and December 31, 2024, the long-term portion of the fair value of the Swap was $438 and $0, respectively, and is included in other long-term liabilities in the accompanying consolidated balance sheets.

For the three months ended September 30, 2025 and 2024, amounts reported in other comprehensive income in the accompanying consolidated statements of operations and comprehensive income are net of tax of $88 and $0, respectively.

For the nine months ended September 30, 2025 and 2024, amounts reported in other comprehensive income in the accompanying consolidated statements of operations and comprehensive income are net of tax of $28 and $0, respectively.

10. Leases

Balance sheet information related to leases consisted of the following for the periods presented:


		As of
	Classification	September 30, 2025		December 31, 2024
Assets
Operating	Operating right of use assets, net	$	901,631	$	924,896
Finance	Property and equipment, net		11,566		12,344
Total lease assets		$	913,197	$	937,240

Liabilities
Current
Operating	Current maturities of operating lease liability	$	52,330	$	48,986
Finance	Current maturities of finance lease liability		857		804
Long-term
Operating	Operating lease liability		871,296		890,613
Finance	Financing lease liability		12,575		13,262
Total lease liabilities		$	937,058	$	953,665

Components of total lease cost, net, consisted of the following for the periods presented:

          
         Three Months Ended September 30,

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Mister Car Wash, Inc. 10-Q