Good afternoon, and welcome to Mister Car Wash Third Quarter 2025 Conference Call. Please note that this is being recorded, and a reproduction of this call, in whole or in part, is not permitted without written authorization from the company. I will now turn the call over to Eddie Plank, Vice President of Investor Relations.

Good afternoon, everyone, and thank you for joining us to discuss our third quarter financial results. With me on the call today are John Lai, Chairman and Chief Executive Officer; and Jed Gold, Chief Financial Officer. After John and Jed have made their formal remarks, we'll open the call to questions. During this conference call, references to non-GAAP financial measures will be made. A complete reconciliation of these measures to the most comparable GAAP measures has been included in the company's earnings press release issued earlier today and posted to the Investor Relations section of the company's website. As a reminder, comments made on today's call 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. While the company may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulation. Please review the forward-looking statements disclaimer contained in the company's SEC filings, including its most recent 10-K and 10-Q reports as such factors may be updated from time to time. I'll now turn the call over to John.

Thanks, Eddie. Good afternoon, everyone, and thanks for joining our third quarter 2025 earnings call. We are very pleased with our performance in Q3. Our team delivered strong growth with revenue up 6% to $263 million and adjusted EBITDA increasing 10% to $87 million. In addition, our 3.1% comparable store sales growth marks the tenth consecutive quarter of comp gains. These results were fueled by strong UWC growth and exceptional execution from our powerhouse operations team, who consistently raised the bar and reset our high standard for excellence. We ended Q3 with approximately 2.2 million UWC members, a 6% increase year-over-year. I'm particularly pleased with the continued strong capture rates experienced across our stores. Our UWC performance was led by our Titanium 360 tier, which reached approximately 25% penetration of our total membership base. During the quarter, we completed the rollout of our base membership price increase and are encouraged by the member adoption and retention trends to date. These initial results demonstrate the strong price-to-value relationship and speak to future opportunities to drive revenue growth. Importantly, our commitment to delivering high-quality service at an accessible price point continues to be a key objective for our brand. Separately, after the quarter closed, we announced the acquisition of five stores in Lubbock, Texas. This expands our footprint in this market to nine locations, more than doubling our market share and offering customers greater convenience and more choices, amplifying our network effect. We have a strong track record of successfully acquiring and integrating businesses and look forward to reopening under the Mister flag once all the value-added improvements have been put in place. As the industry continues to streamline and consolidate, we anticipate further opportunities to drive growth through strategic M&A. Building on that thought, we believe the industry is entering a healthier, more rational phase. The pace of new competitor openings in our markets continues to moderate, reducing pressure on trade areas. Over time, we also expect the rapid expansion that peaked in 2023 to lead to some capacity exiting the market, creating room for strong operators like Mister to capture incremental market share and drive growth. Ultimately, we're setting the stage for meaningful, sustainable performance by investing strategically, driving innovation and sharpening our competitive edge, all while delivering on our mission to produce a clean, dry, shiny car with unparalleled customer service. With the largest subscription base in the industry, strong unit economics and a long history of innovation, we're exceptionally well positioned to accelerate growth and elevate our brand for the long term. Now let's discuss the progress we've made on our strategic imperatives during the third quarter. Let me start with expanding our footprint. During the quarter, we opened five new greenfield locations, bringing our total store count to 527 stores across 21 states. And just a few days ago, we celebrated the grand reopening of one of our flagship stores in Tucson at the corner of Speedway Boulevard and Country Club, which we fundamentally transformed to deliver an even better customer experience. With one quarter left in 2025, we remain on track to open approximately 30 new stores this year. In addition to the five stores we recently acquired. What's most exciting is that we're only about halfway to our long-term goal of more than 1,000 Mister locations across the U.S., underscoring the growth opportunity in front of us. Moving on to increasing our innovative solutions. At Mister, innovation is more than just ideas. It's a launch pad for growth and delivering differentiated solutions that further separate Mister from other operators in the marketplace. From improving the quality of the water we use to fine-tuning our chemistry and tunnel equipment to introducing proprietary extra services like Titanium 360, innovation is at the heart of who we are at Mister. We continue to put our capital to work where we'll have the biggest impact on sales, our stores and improving the customer experience, and we remain committed to investing in technology and R&D to further differentiate and extend our lead. Our innovation pipeline is strong. And although it's too early to discuss details, we aim to bring our newest major innovation to market in 2026. Next, driving traffic and growing membership. We were encouraged by the results of our marketing tests in Q2. And in Q4, we're stepping up our marketing investment and expanding our testing program in a select number of markets. Our goal is clear: build a strong foundation where marketing becomes a scalable growth engine for Mister in 2026 and beyond. This phase is all about focus and precision. Zeroing in on what matters most to understand which channels and tactics drive efficient incremental sales growth. Once we've established that baseline, we'll look to broaden our efforts exploring new channels and creative promotional offers that generate a meaningful return on our advertising investments. With a long runway of opportunity ahead, we're excited about what this program can unlock for Mister's long-term growth, particularly within our retail business. Finally, building a best-in-class team. We have the best team in the industry, and it shows. From our frontline team members in the stores all the way up to our senior leadership, our people and culture are woven into every layer of the business, driving performance, innovation and customer experience. Our team has been the high octane fuel behind our success as we continue to scale, and we remain fully committed to investing in their growth and development and long-term potential. Before I wrap up my prepared remarks, I want to thank our amazing people across the entire company for their ongoing contributions and commitment to our customers, which allows us to deliver solid results. In summary, this is an exciting time for Mister, and we're energized by where our business stands today and where we're going tomorrow. Industry headwinds are clearing. We're actively managing variability in our retail performance and we're capitalizing on M&A opportunities to fuel additional growth. By strengthening our core, driving innovation and expanding both organically and inorganically, we're not only meeting strong customer demand, we're reshaping our category for the future. We've laid a strong foundation for sustainable growth and are well positioned to lead both our business and the broader industry into its next chapter. I'll now turn the call over to Jed to provide more commentary on our financial results.

Thanks, John, and good afternoon, everyone. Overall, we are pleased with our third quarter results and the performance of the business. We exceeded the high end of our expectations with comp store sales growth of 3.1% and adjusted EBITDA of $87 million. Additionally, we delivered adjusted EPS of $0.11, a 38% increase year-over-year. The team remains focused on the task at hand and aligned on delivering results. From a channel mix perspective, UWC was the primary growth driver, representing over 75% of total sales. This large and predictable base of subscription revenue continues to be the cornerstone of our resilient business model and a key contributor to our strong free cash flow. As noted in our earnings press release, we started reporting free cash flow in discretionary terms to highlight the strength of our cash generation and provide greater transparency into the nondiscretionary CapEx needs of the business. I'll expand on this shortly. We also successfully completed the rollout of our base membership price increases, which contributed to the uplift in Express revenue per member during the quarter. As previously shared, this rollout was phased across markets and positions us well to drive continued revenue per member growth into next year. Importantly, churn has remained in line with expectations with a modest initial increase, followed by a reversion to the mean within 4 to 6 weeks. Across the industry landscape, we see encouraging signs of normalization. First, the pace of new competitor store openings within a 3-mile radius of existing Mister Car Wash locations has moderated compared to recent years, with an estimated 40% fewer new builds year-to-date versus last year, contributing to a healthier, more balanced environment. Second, as we've noted in prior calls, Mister locations that experienced competitive pressure continue to show year-over-year growth within 18 to 24 months of the competitor opening, ultimately outperforming the chain-wide average. During the third quarter, for example, the 49 sites facing competition less than a year old comped down low single digits, while sites with competition older than two years or no competition comped up mid- to high single digits on average. This underpins what we've long believed. While customers may explore alternatives, they consistently return to Mister for the superior customer experience we deliver. These two trends give us confidence in the quality of our model and optimism about our ability to accelerate growth moving forward. Now let me provide some more details on the third quarter numbers. For simplicity, I'll be referring to adjusted numbers only, which exclude items such as stock-based compensation and gain or loss from the disposition of assets. The reconciliation of adjusted figures can be found in our 8-K filings and earnings press release. Net revenues increased 6% driven by a combination of 3.1% comparable store sales growth and the contribution of incremental revenue from the 26 net new stores opened over the last 12 months. UWC comps increased high single digits, while retail comps performed in line with our expectations for a low double-digit decrease. We achieved a 6% increase in UWC membership over the prior year while maintaining retention rates consistent with our long-term averages. Overall, we remain pleased with the performance and productivity of our store fleet and believe that the combination of decreasing competition and more data-driven site selection methodology will drive higher returns on our invested capital moving forward. Sales growth was the strongest in July, cycling a relatively easier lap but nonetheless positive through each month of the quarter. UWC sales represented 77% of total wash sales, and we ended the quarter with more than 2.2 million UWC members. At the end of the quarter, the membership split among base, Platinum and Titanium was approximately 41%, 34% and 25%, respectively. I'd like to point out that our subscription members remain resilient, and we're not seeing trade down to lower-priced packages. Finally, we continue to see strength in Express revenue per member, which increased approximately 4% year-over-year to $29.56. This was driven by our base membership price increases and additional mix shift into Titanium given the strong consumer response to our targeted trial promotion over the summer. Total operating expenses were $177 million in the quarter. As a percentage of revenue, total operating expenses improved 130 basis points to 67.1%, primarily due to sales leverage and disciplined cost management as the team continues to find ways to optimize costs and maximize operational leverage. Within total operating expenses, labor and chemicals improved 40 basis points to 28%, as leverage on our stronger sales, along with some savings in chemical costs more than offset higher labor expenses. Other store operating expenses increased modestly by 10 basis points to 32.7%, driven by higher cash rent tied to our strategic new store investments and elevated utility costs, particularly electricity where rates have been trending upward. G&A expense improved by 100 basis points to 6.4% as a result of better expense management. Looking ahead, we plan to invest approximately $2 million in Q4 to support the next wave of marketing tests. Building on the encouraging results from Q2, we're optimistic about how this next phase will resonate with consumers and excited to fine-tune our approach to marketing and advertising going into 2026. EBITDA increased 10% to $87 million, and EBITDA margin increased to 130 basis points to 32.9%. Of note, this is on top of a 100 basis point increase last year and represents the highest Q3 EBITDA margin that we have ever reported. Third quarter interest expense improved by 32% to $14 million, primarily due to lower average interest rates year-over-year and lower borrowings compared to last year as we've reduced our total outstanding debt by more than $100 million over the last 12 months. Finally, third quarter net income and net income per diluted share were $37 million and $0.11, respectively. Moving on to some balance sheet and cash flow highlights. At the end of the quarter, cash and cash equivalents were $36 million, and outstanding long-term debt was $827 million, a $22 million sequential improvement as we voluntarily paid down debt during the quarter. Importantly, our leverage ratio stands at 2.4x adjusted EBITDA, well within our stated target of 2x to 3x, and our liquidity position remains strong, positioning us well to continue investing in future growth opportunities while reducing debt when feasible. In addition, we were active in the sale-leaseback market. During the third quarter, we completed one sale-leaseback transaction involving one car wash location for an aggregate consideration of $5 million. In addition, our pipeline for Q4 is strong, with seven car washes currently under LOI or contract. The passage of The One Big Beautiful Bill Act and the restoration of 100% bonus depreciation incentive have sparked a notable increase in demand, which along with the high quality of our assets is allowing us to negotiate deals on very favorable terms, and we are seeing a material improvement in cap rates as a result. Further easing of interest rates will likely provide an additional tailwind to cap rate trends. In addition, the majority of our capital expenditures qualify for 100% bonus depreciation under the bill. Coupled with our existing net operating losses, we expect these deductions to fully offset taxable income and reduce our federal cash tax liability to near zero for the next several years. Now I'd like to take a moment to highlight our free cash flow. While we continue to believe that our greenfield development program remains the most effective use of capital, growth CapEx represents nearly 90% of our total capital expenditures. As such, we believe it's important to emphasize the strength of our underlying cash generation. Excluding growth-related investments, we generated free cash flow of $202 million for the nine months ended September 30, compared to $174 million in the same period last year. This represents 26% of sales and highlights the cash flow performance of our core operations and our ability to generate meaningful cash flow while investing to maintain our existing fleet of core stores. It also underscores the financial flexibility we have to pursue strategic opportunities beyond our greenfield development program. Finally, regarding the Lubbock acquisition, announced shortly after we closed the third quarter. The addition of these five stores strengthens our market position and enhances the value proposition for our subscription members. From a financial and membership standpoint, we expect the impact to be immaterial. We do expect the five stores to be incremental to our previously communicated guidance of approximately 30. Now I'll provide an update on our full year outlook. We are reiterating our previously provided guidance ranges for the fiscal year ending December 31, 2025. To assist with your modeling, I'll add some additional context and color. First, on comparable store sales, given our stronger-than-anticipated Q3 results, we now expect to finish the year at the high end or slightly above our guidance range of 1.5% to 2.5%. This reflects quarter-to-date trends through October, which as we noted on our last call, represented the toughest year-over-year comparison of any month in Q4. Second, on revenue, we expect full year revenue to land near the high end of our guidance range of $1.046 billion to $1.054 billion. This outlook incorporates approximately 17 new store openings in Q4, up from 14 in Q4 of 2024, and the timing of revenue contributions from those stores. We are also factoring in a modest sales uplift from our ongoing marketing tests. Finally, on adjusted EBITDA, we expect to be at the high end of our guidance range of $338 million to $342 million, as increased spend on our Q4 marketing test is largely offset by a corresponding sales lift. For even more details, the full list of our outlook ranges for 2025 can be found in the table in today's earnings press release. In summary, we remain committed to investing in our growth initiatives while continuing to deliver strong profitability and cash flow. Looking ahead, we are encouraged by the strength of our markets, the resilience of our business model and the consistent execution by our teams. We are well positioned to capitalize on the favorable tailwinds emerging in the car wash industry, achieve our financial objectives and create lasting value for our shareholders.

That concludes our prepared remarks, and we will now open the call for questions.

Maybe first one just a couple of parts. So could you just help us understand where the sales upside was that materialized within Q3? And then on the October comment, I know there was a more difficult comparison, but just anything you've noticed from your core customers, a lot of noise out there with the government shutdown, some of these SNAP benefits potentially going away for a period. So anything that you've noticed on the start to Q4, just that's been a little different than your expectations?

Yes, it's Jed. Thank you for the question. To address the first part regarding what contributed to the strength in Q3, all months showed positive trends, as we mentioned in our previous call. July was slightly softer compared to the other months, while it was still the strongest of the three. We were pleased with the revenue per member growth during the quarter, which was driven by a stronger Titanium mix, exceeding our expectations at just over 25%. Looking ahead to October, we anticipate it will be the toughest comparison of the year, as we're up against a positive low double-digit comp. We anticipated this challenge, and it has been factored into our full-year guidance.

Very good. And then second question, I appreciate all the cash flow commentary. It seems like a lot of things move in your favor with the accelerated depreciation and some of the leaseback demand picking up. So my question is, what's the pecking order of your cash flow usage from here? Is it leverage pay down? Is it new units? Could you even buy back some stock directly from your private equity sponsor, if possible? Just help us think about the pecking order of your cash flow usage?

Yes. Really happy with the free cash flow that's being generated from the business. It does present, as you highlighted, a lot of optionality for us to drive shareholder value. As we look at the uses of cash, greenfield is certainly the highest and best use of capital. So we're not looking to pull off the gas in any way on continuing to build new units infill within our existing markets, expanding our footprint. And then some of the other alternatives that you laid down, it gives us some alternatives right for potential share buyback, debt paydown, but also, we continue to look at different M&A opportunities. So really hard to say because it's not a static analysis. It's something that we're going to continually look at and optimize that cash deployment.

First one, just on a couple of questions on pricing. I wanted to understand how the base price increase wraps into '26? And then secondly, how do you guys think about the ability to optimize pricing at a local level? I know some of your markets have a slightly different pricing architecture, but I think most are fairly consistent. So just wondering if there's an opportunity to create price zones based on local market dynamics.

Yes. I'll start. Good question. So listen, the way we approach pricing is on a market-specific basis. We would always love to get to a national pricing structure, but we think that, that's not the right approach. So today, we're continuously evaluating our strategy, and we look at it through the lens of the value that we're providing to our customers. We keep a finger on the pulse of competitive activity. I think the fact that we're delivering a premium experience justifies us perhaps moving up the ladder on pricing when we see that opportunity present itself. But we've been very cautious with respect to our approach. Typically, we're not going to telegraph any future price moves on a call like this, so we like to keep that close to the vest.

Regarding your question about how the base price increase will impact 2026, the rollout has proceeded as we anticipated. Initially, we expect a brief period of elevated churn lasting 4 to 6 weeks, but then churn should return to its historical average. The base price increase was rolled out in phases, with some of our larger markets implementing it only in late Q3 or early Q4. Consequently, most of the benefits from these markets will be seen in 2026. We estimate that approximately 25% to 33% of the total base price increase will affect 2026, with the remainder impacting 2025.

All right. And then, Jed, just based on your comments around full year comp, it seems like you're not planning for a negative comp in the fourth quarter. Just wanted to confirm that.

That is correct. We are not planning on a negative comp for the full quarter, but keep in mind, October will be a bit more challenging. However, November and December should ease up a little, so we expect to be positive for the quarter.

We were wondering if you could provide some more color on membership trends. We calculate members per store in Q3 declining from Q2. And it looks like the total member count was either flat sequentially or possibly saw some slight decline, if my math is correct. Any insight you could provide into that trend would be helpful. And do you expect this trend to continue over the coming quarters?

Yes. Thanks for the question. This is John. So you're absolutely right. Sequentially, our membership base has been relatively flat. And that also is kind of in line with what we expected when we look at retail volume. And so for us, retail volume is the top of the funnel as we get more retail traffic in the door. We've proven that we can convert them at north of a 10% capture rate into membership. So really, for us, it's solving for this retail traffic and getting more retail customers in the door to increase our member base. I will say that when we look at utilization of our current member base, it's remained steady, and so the level of engagement has not waned. And we're also looking to deepen the relationship that we have with our members to improve that engagement level, primarily focused on how we onboard that new member, which is a really critical time to establish a different habit of behavior. And we think that, that first 90 days is absolutely critical. Some additional color on UWC though and things that I think are important from a KPI perspective, our churn has remained steady at roughly 5%. So no uptick in churn, which is always a good thing. And when we look at the shape of that retention curve as our member base matures and they stay in the program longer, that churn rate decreases for those folks staying longer. So for us, it's all about getting them in, getting them used to washing their car ideally once a week. And once we establish that behavior, they tend to stay in the program. So today, we're super happy. I think contextually, when you look at our member base, we're definitely in the upper quartile on an industry-wide basis with approximately 5,000 members per store for our mature stores. But we have a number of stores that have 7,000 members, a bunch of stores that have 10,000 members. So it just emboldens us that we have organic growth inside of our existing customer base. And if I were just to zoom out for a second, when we think about the TAM for subscription, we believe that the market is under subscribed and that there is a whole lot more potential for our industry to grow their membership base. We look at other sectors like the gym space that has north of a 25% of the U.S. population belonging to some gym membership. And we think that that customer parallels a car wash customer very closely. So to that end, that is what our potential is. So if we can double the TAM potential of our membership universe, that would be a really awesome tailwind for our business. Yes. So as we noted in the last call, in Q2, we had a mid-single-digit uptick in comp store sales for the six pilot markets that on average that we tested in. And then we took the learnings from that and leverage those learns to deploy in our Q4 test, which is currently underway. So we don't have anything to share with you in terms of how that is currently trending because it's relatively new. But for us, it was breaking down channel offer the different types of image and building upon the good and then also discarding the stuff that wasn't moving the needle.

As we consider Q4, we have included a slight sales increase, but it's still a limited test. We still view it as a test, and it will take some time to gain traction, which limits the sales benefit we anticipate seeing in the fourth quarter.

So the competitive intensity within the industry is moderating, yet retail remains down low double digits. So is there a case where economic sensitivity is rising? Or alternatively, as you raise the base price membership, the appeal of becoming an a la carte member looks a little bit more attractive. Maybe you could just give us a sense of what you think those dynamics start playing out?

Yes, Michael, that's a good question. While we notice that the influx of new competitors in the market is decreasing from the peak seen in 2023, which is a positive sign for us, those businesses are still operational. Currently, 80% of our portfolio competes within a 3-mile radius. When we evaluate the promotional strategies they are using, most are focused on introductory subscription trials, with minimal discounting on retail. Regarding the price sensitivity of our retail base, our $10 car wash is affordable for the majority of Americans. However, we recognize that individuals in the lower income bracket are feeling more pressure, which we believe is affecting their frequency of purchases.

Yes, Michael, to clarify, when we examine the stores targeting lower-income demographics, they have been consistently underperforming compared to the rest of our portfolio. This indicates that lower-end consumers are experiencing more pressure, causing their spending power to diminish.

Yes. Michael, so philosophically, I think there's never been a primary thrust on maximizing profitability per customer. To your point, we were more about driving membership early on in our life cycle. But where we sit today, we're definitely looking more at how we can increase the value of that member. So when we look at revenue per member, which is a really important KPI for us, that's shown a really healthy uptick over the last 5 years, primarily driven by Titanium. So we were really pleased with how we were able to take an existing, very large installed base and increase the value of that base. And one could argue, without taking a price increase, it was introducing a new top tier. So that was terrific. But as we also noted, though, after roughly 18 years of holding the line on base membership, with rising input costs, we were kind of kicking and screaming to the table going, 'Hey, we need to take our membership price up,' which we did, the base, and that flowed through rather nicely. So I think to your question, today, we want our cake and eat it too. We want to grow our member base, but we also want to increase the value of that member, and we're trying to do both of those simultaneously.

I have a quick question. I wanted to revisit the marketing test. Has the expanded marketing test increased from four markets to eight? Additionally, what improvements are you seeing in brand awareness? I'm trying to understand what you believe the optimal spending level might be in the near term or moving forward.

Yes. Thanks for the question. So we're just in the throes of the Q4 test right now. So too early for us to share anything of substance, although we are excited about the potential. So we just point back to the results that we had in Q2, which were promising, and emboldens us to want to turn up the knob more. As we've noted on previous calls, our ad spend as a percentage of revenue is minuscule, and we would love to be able to turn up the knob, but we want to be able to justify the investment and not just throw money at it. So we're holding ourselves internally to a high bar from a ROAS perspective and making sure that every incremental dollar that we spend is going to generate ideally a 3x return in revenue.

Jake, to expand on that, you mentioned brand awareness as a key metric for success. While we are monitoring this, our main focus is on driving incremental sales and achieving a higher return on our advertising investments. We want to understand what strategies work and what doesn't, including messaging, channels, spending levels, and how different channels work together. There’s a lot involved in this process, and we aim to enhance our approach, developing a disciplined marketing strategy that will support our growth in the future. We are really optimistic about the promising results from Q2, which encourages us to further refine our strategies in Q4.

I wanted to ask if you could remind us about Titanium and when the first several markets were rolled out. Are we currently at around 1.5 to 2 years in some places? Additionally, could you discuss the membership trends in those longer-established markets? How is Titanium membership growing, and what is happening with other tiers in those markets?

Yes. Simeon, thanks for the question. So it's launched in 2023 and there's a rolling rollout. So we don't do it all in one day. We roll it out by region and make sure that we're reducing it. So we've had this benefit of month-over-month sequential growth that has been helpful. The membership, I think, recovering in the 25% range. And again, that has exceeded our expectations. When we look at the blend of the premium mix, which is our Platinum and Titanium, that's roughly 60% of our overall member base. And again, we're very pleased with that number. Would we like to see it grow? For sure. And so internally, we're working on some techniques to continue to elevate the premiumization of our membership universe. But the way we go about it, has been very kind of what we call slow burn. In that, we don't want to become overly promotional and trying to get people into those tiers. But the fact that they have adopted it, and they're sticking in the program, is really a testament to the value that they're driving from the service that we're providing.

Yes. When we analyze by market, there are some that have a mix of 35% or more, which gives us optimism that there are still opportunities to increase our Titanium mix and enhance membership premiumization. However, it will not occur at the accelerated pace we experienced over the last 1.5 years. Achieving this will require a dedicated effort from our frontline team members to improve their communication with members, which will help us attain a higher Titanium mix across more of our markets.

Yes. Listen, the greenfield program, there's been a lot of learnings for us. I think let me start by saying that the bulk of the greenfields that we've opened are hitting it out of the park. We're absolutely crushing it. But that said, there's been another bucket of stores that have come under some competitive intrusion, and those stores are ramping at a different trajectory as a result. There's another kind of bucket as we break them into different categories of stores that we're calling the early stores, that were intentionally early, where we went in to establish our position in the trade area that hasn't been fully built out, but we expect that it will, and getting that beachhead will hopefully prevent others from coming in. So again, we're optimistic about the long-term potential of those locations. But then there's also a smaller segment of stores where we just made some site selection errors, and we learned a lot from those mistakes, and we baked that into a lot of new protocols. One of those is we're becoming a lot more data-driven and rigorous in our site selection process. And our real estate team going forward is really, really focused on quality and making sure that we have a super high degree of confidence in the success of the future pipeline.

Quick one on unit growth. You previously brought down your expectations for this year by a bit to 30 greenfields. Should we expect this to be your new run rate going into 2026? And does changes in the M&A environment impact your greenfield plans at all?

Yes, Phillip. So as we think about 2025, the guidance of approximately 30, as we shared in our prepared remarks, important to note that, that's just greenfields. That does not factor in any M&A. So the Lubbock acquisition would be incremental to that. And then as we think about 2026, we expect the greenfield development to be in line with what we see in 2025.

Yes, this is John. So great question. So listen, we had an established presence in Lubbock, albeit a small one with 4 stores. And we have the opportunity to double our footprint with a 5-store acquisition to get to 9 locations. It put us clearly in the #1 seat for that market. But to your point, it is a competitive market. There's a lot of good operators in that market that we have the highest regard for. But at the end of the day, it's not a market that we would add a greenfield to, given, to your point, the market is mature and kind of that capacity. But this really, again, speaks to the strength that we have from a growth perspective as a company and that we're agnostic in unit growth. We can buy businesses, or we can build businesses, build stores, and the fact that we have a two-pronged approach to strengthen our position. And so again, our primary objective is to densify and fortify each of the markets that we're in, elevate our market share. And if there's a good opportunity to do that through M&A, we will pull the trigger. And that's exactly what we did in Lubbock. We're very optimistic about that.

With the recent acquisition, should we expect M&A to accelerate going forward? Or is this acquisition just more opportunistic in nature?

Yes, it's challenging for us to forecast mergers and acquisitions since they can be unpredictable. It often depends on when opportunities arise in the market, so we can't make any concrete projections. However, we are actively open to and assessing opportunities as they present themselves. Currently, we are exploring smaller acquisitions that we refer to as bolt-ons, which can enhance our market position. Overall, we are very optimistic about the potential for larger combinations in the future, though predicting the timing is tough. I anticipate that over the next two to five years, the industry will likely see a reduction in the number of players, especially among private equity-backed platforms. We believe many will exit the market at lower multiples than their initial investment.

How do the asking multiples in the M&A market compare now to what you were seeing a year or two ago?

It's dropped precipitously.

Congrats on a good quarter. John, I wanted to revisit what you mentioned in your prepared remarks about opportunities to drive revenue growth related to pricing. Is this more of a one-time effect, or does it indicate that pricing has become a regular component as we consider multiyear growth drivers for this business?

Yes. I think there are a couple of points to consider. We view our price increases as occasional and certainly trailing behind inflation, typically happening no more than once a year and ideally every two years. If we were to adjust prices more often than that, it could unsettle our customers, which we want to avoid. We need to be cautious in our approach. However, as we analyze our business at the regional and store levels, we see several opportunities to optimize pricing. We won't necessarily hold these opportunities back, but we will act on them when the timing is right. That said, we won't signal these decisions in this call.

Yes. Bobby, when we consider the ramp curve, it’s clear that most of the comparable store sales growth is coming from stores that have been open for less than five years, which is consistent with trends seen in other retailers. There’s a slight acceleration in comps for those newer stores. However, mature stores generally lag behind their newer counterparts. Our situation is somewhat unusual because we have 63 interior clean locations, all of which are in the most mature categories. In the recent quarter, those interior clean locations experienced a decline of 1.6% in comparable sales, which negatively impacted the overall comp and, consequently, the performance of our mature store base.

In the markets where you have tested marketing spend, have you seen any competitive responses?

We have nothing out of the ordinary.

Yes. Just to clarify, some markets have performance at 35%, and we have certain stores in those locations that exceed that figure. As we analyze these markets and the factors contributing to their success, it largely comes down to a combination of elements, including favorable economic conditions and strong operational leadership. This leadership is crucial for aligning the team with their objectives and enhancing the Titanium mix. Some operators in various markets excel in this regard more than others, but the leadership at the market level plays a significant role.

How are you thinking about the retail comps in the fourth quarter? It seems like you can hit the high end even if retail gets a bit worse. So is that just conservatism given the consumer is about to absorb tariffs in other areas of their wallet? I know you have the tough comp in October, but just any help on the puts and takes into the fourth quarter?

As we consider the fourth quarter comparison, we will benefit from the ongoing positive impact of the base membership price increase, which should enhance revenue per member. Our focus will remain on increasing Titanium membership penetration and exploring further opportunities in that area. The highest end of our guidance suggests a modest growth in UWC revenue per member, with expectations of positive low to mid-single digit growth. However, retail sales comp is projected to decline, with expectations for a negative high teens outcome, indicating a worsening trend compared to the third quarter, which was slightly better than the second quarter. Forecasting retail performance remains challenging, so we are allowing ourselves some leeway, particularly given the robust sales we experienced last October.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to John Lai for any closing remarks.

Well, thanks, everyone, for joining us for the Q3 call. We had a great quarter, as we noted. We're super optimistic about how the year is shaping up. We have a lot of momentum in the business right now. More importantly, we're very excited about the long-term opportunity to double our footprint. And I think as the noise from some of the underperforming car wash chains dies down, emerging from that will be a handful of very well run, well capitalized, growth-oriented car wash platforms that will ultimately prevail, and we expect to be one of them. So thank you, guys. Look forward to talking to you on the next call.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.