Mister Car Wash has a market share of less than 5%, according to its CEO.
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Shares of Mister Car Wash, the first pure-play carwash chain to go public, soared as much as 46% in its first day of trading.
Mister Car (ticker: MCW) opened at $18.90, peaked at $21.85 and changed hands at $20.35 late in the day, for a gain of nearly 36%.
The company is issuing stock to some of its 6,000 employees, including its operations management team, John Lai, president and CEO, told Barron’s. “We believe in sharing. We couldn’t do it without our amazing leaders,” Lai said.
The strong performance came as Mister Car Wash delivered the day’s biggest deal. Mister Car Wash (MCW) raised $562.5 million after selling 37.5 million shares at $15, the bottom of the range of $15 to $17 it had told investors to expect..
Founded in 1996, Mister Car Wash has 344 locations in 21 states, the prospectus for the deal said. The company has washed more than 345 million cars.
Lai said the company’s monthly subscription program, Unlimited Wash Club, has been transformative. It generates more than 60% of sales and provides a predictable, recurring high-margin revenue stream, he said.
A membership that covers only unlimited cleaning of the outside of a vehicle costs $19.99 a month. This jumps to $29.99 a month for the platinum membership, which includes an underbody wash and wheel polish, according to the Mister Car Wash website. Interior cleaning starts at $59.99 a month, the website said.
“For most Americans, the automobile is more than just transportation, it’s a source of pride that they derive great joy from,” Lai said.
The company is also the first pure-play carwash to go public, Lai said. Driven Brands (DVRN), owned by Roark Capital, listed its shares in February, rising 21% in its first day of trading. Driven provides services such as repairs and maintenance, in addition to washing.
“We’re the world’s largest carwash company and we wash more cars than anybody. We have less than 5% of market share so the upside potential feels infinite,” Lai said.
Mister Car Wash plans to use proceeds from the IPO to pay down debt, which stood at about $1.05 billion as of March 31, the prospectus said. This will reduce the company’s debt to 2.5 times earnings before interest, taxes, depreciation, and amortization, Lai said.
Mister Car Wash has been owned by three different private-equity firms during its 25-year history. Brown, McMillan & Co sold Mister Car Wash to OnCap, the PE arm of Onex Corp in 2007. Leonard Green & Partners acquired it in 2014.
Mister Car Wash has paid out at least two dividends since Green took ownership. This includes a $215 million distribution to shareholders in 2019 and a $213 million dividend in 2016, according to Moody’s Investors Service. The total amount means Green has already made back its equity investment in Mister Car Wash.
The PE firm sold roughly 3.3 million shares in the IPO, making about $49 million.
Green will own nearly 78% of Mister Car Wash after the offering, the prospectus said. At $20.35, Green’s holding is valued at $4.7 billion. “They’ve been amazing throughout this journey. They let us run the company without micromanaging,” Lai said of Leonard Green.
Write to Luisa Beltran at [email protected]
