Q4 2024 Mister Car Wash Inc Earnings Call

Jedidiah Gold

Thank you, John, and good afternoon, everyone. In summary, Mister had another record-breaking year marked by 7% revenue growth, 12% adjusted EBITDA growth and 16% growth in adjusted earnings per share, and we ended the year on a high note with a really strong fourth quarter, fueled by the successful rollout of our new titanium offering earlier during the year. Overall, we are pleased with our Q4 performance. From a top line perspective, sales were at the high end of our guidance range and comp trends were the strongest we’ve seen in over two years, led by high single-digit growth at UWC and a slightly positive retail comp. From a bottom line perspective, the team maintained strong cost discipline, resulting in adjusted EBITDA and adjusted net income that was better than our guidance range.
Fourth quarter sales demonstrated the power of our predominantly subscription model. Sales benefited from a particularly strong October that included a significant uptick in retail volume as our teams capitalized on more favorable weather conditions. The favorable weather trends and retail improvement translated to more at bats and slightly more opportunities to trade customers into membership. In addition, our subscription business remained resilient, providing us with a significant and stable reoccurring revenue base. Member utilization held constant in Q4, which is a key indicator of member satisfaction and we didn’t see any material changes in our core churn levels from previous quarters.
Our titanium membership also continued to perform well, accounting for 23% of our membership mix and helping to drive a 10% increase in Express revenue per member during the quarter. Titanium far exceeded our expectations for the year, and we are pleased with how the team has executed the launch. Finally, we opened 13 net new express extender car washes in the quarter, totaling a record 38 net greenfield openings for the full year. This equated to 39 new stores, one relocation opening and two closures. Now I’ll provide some more detail on fourth quarter results.
For simplicity, I’ll be referring to adjusted numbers only which exclude [on such] as stock-based compensation and loss from the disposition of assets. The full reconciliation of adjusted figures can be found in our 8-K filing and earnings press release. Net revenues increased 9%, driven by a combination of 6% comparable store sales growth and the contribution of incremental revenue from our new store openings. UWC sales represented 75% of total wash sales, and we ended the quarter with more than 2.1 million UWC members. On a year-over-year basis, the number of UWC members increased by 46,000 members or roughly 2%.
At the end of the quarter, the membership split among base, platinum and titanium was approximately 41%, 36% and 23%, respectively. The average Express revenue per member in Q4 increased 10% to $28.65 versus $26.14 in the fourth quarter last year. Total operating costs and expenses were $173 million in the quarter. As a percentage of net revenue, total operating expenses decreased 100 basis points to 68.8%. Labor and Chemicals decreased 110 basis points to 27.8%, driven primarily by work the team completed earlier in the year to optimize our labor model at our interior clean locations and leveraging our scale and purchasing and shipping of chemicals.
This was partially offset by increased labor rates as we now begin to anniversary those savings in chemical costs and interior clean labor we don’t expect to realize incremental gains in 2025. Other store operating expenses increased 50 basis points to 33.1%, primarily driven by higher rent expense related to our new store growth and sale leasebacks as well as higher utilities, equipment and facilities and maintenance costs. G&A expense decreased 40 basis points to 7.9% driven primarily by better expense management, partially offset by an increase in marketing expense. EBITDA increased 13% to $78 million and EBITDA margin increased 100 basis points to 31.2%. Looking at the full year, EBITDA was $321 million, representing a 12% year-over-year increase.
To echo John’s sentiment of how far we’ve come over the last decade, our 2024 EBITDA reflects a 10-year compounded annual growth rate of 22%. Fourth quarter interest expense decreased by 7% to $19 million, primarily due to lower average interest rates year-over-year despite modestly higher borrowings compared to last year. Finally, fourth quarter net income and net income per diluted share were $31 million and $0.09, respectively. Moving on to some balance sheet and cash flow highlights at the end of the quarter. Cash and cash equivalents were $67 million, largely driven by proceeds from our sale leasebacks.
Outstanding long-term debt was $920 million, a $22 million sequential decrease as we paid down our revolver balance during the quarter. This reduction in net long-term debt, coupled with our strong full year performance and increased cash balance resulted in a [0.3] reduction in our net leverage ratio to 7x. Our balance sheet remains healthy and flexible, and we continue to self-fund our growth and expansion via [sell leaseback]. In the fourth quarter, we were very active in the sell leaseback market, completing 21 sale-leaseback transactions involving 21 car wash locations for an aggregate consideration of $98 million. Now I’ll provide some color around our initial 2025 outlook.
With respect to sales, we are encouraged by the momentum we’ve seen build over the last two quarters. However, with many factors such as inflation still impacting discretionary spend and the outsized benefit of weather on recent results, it’s too early to say whether consumer patterns will improve. As such, we are anticipating continued headwinds in retail, though to a lesser extent than 2024. As we think about the progression of the year and total comparable store sales, we expect the front half to be slightly stronger than the back half. This is largely due to lapping the full price rollout of Titanium in late Q2 and then more challenging comparisons in the back half.
With respect to store growth, we expect to open approximately 30 to 35 new greenfields this year. The majority of these will be in existing markets where we have opportunities to densify, fortify and grow our market share. As John mentioned, we are becoming more data-driven on site selection and are more rigorously evaluating and scoring sites in our pipeline to drive the highest returns on our capital. The timing of these openings will be back-half weighted with an estimated 30% in the first half and approximately 70% in the second half. In addition to greenfield expansion, we continue to look at other ways to drive the business.
To that end, we are taking a base membership price increase in select markets where we believe we’ve earned it through our distinct value proposition and superior customer experience. We will never compete solely on price. But as we evaluate additional markets, we see opportunity to optimize the base UWC pricing more broadly over the course of the year. Looking at adjusted EBITDA, the high end of our range assumes a roughly 30 basis point uptick in margin compared to last year. I’d like to note that this is despite the incremental rent expense resulting from the record number of sale leasebacks we executed in 2024.
When looking at profitability on an EBITDAR basis, which excludes rent and the impact of sale leasebacks, we are anticipating even greater year-over-year margin expansion of 80 basis points at the high end. On the cost side, we expect to continue to leverage our G&A and slightly decrease G&A expense as a percentage of sales. And we should be in a position to leverage certain expenses this year due to various productivity initiatives and an even greater focus on doing more with less. These efficiencies will be slightly offset by a modest uptick in our marketing investments. We expect to remain active in the sale-leaseback market during 2025.
Sale leasebacks remain the most attractive source of capital for Mister. We are targeting proceeds of $40 million to $50 million during the year with a focus on leveraging the influx of buyer demand to further improve deal economics. In November, we took the opportunity to reprice our term loan and revolving credit facility. We were able to reduce the spread on our term loan to SOFR plus 250 basis points. The reprice and recent paydown of our revolver, coupled with a slightly more favorable rate outlook, will help drive an estimated 20% reduction in interest expense compared to 2024.
The full list of our initial outlook ranges for 2025 can be found in the table in today’s earnings release. But to recap the key items, we expect net revenue of $1.38 billion to $1.64 billion. Comparable store sales grew of 1% to 3%; adjusted EBITDA of $334 million to $346 million, representing approximately 4% to 8% growth year-over-year and representing a margin of 32.2% to 32.5%. We expect adjusted net income per diluted share of $0.43 to $0.45 per share, represent growth of 15% to 22%. Finally, we plan for capital expenditures of $275 million to $305 million during the year.
In closing, I would also like to thank the entire Mister team for their hard work and dedication in a multiunit business, how the entire team takes ownership of their piece of Mister is what enables us to deliver great results. While 2024 was not without challenges, our team faced them head on, executed strong and delivered where it counted most. Moving forward, we are well positioned, and I look forward to continuing to unlock our potential. That concludes our prepared remarks, and we will now open the call for your questions.

Operator

We will now begin the question-and-answer session. (Operator Instructions)
John Heinbockel, Guggenheim Securities.

John Heinbockel

Hey, guys. I wanted to start with pricing and marketing. So what percent of the car wash base are you taking the base pricing up in? And I think is it $22.99 is the right number to think about? And then maybe John from a marketing standpoint, what’s the right level for you guys to spend that over the longer term? And how much do you when do you want to get there? Is that a multiyear journey or you get there this year?

John Lai

Hey, John. Thanks for the question. So with respect to our base pricing, which as we’ve shared previously, we’ve held the line since inception, which is over fifteen years ago. But when we assess the competitive landscape and compare where we sit vis a vis where the median market price is for base, We’re underpriced actually in a lot of markets. So we anticipate over the course of 2025 taking price in those markets where we see those opportunities.
We haven’t put together the specific schedule yet, but it is in play right now. And what we can tell you is that in markets where we did test to see what the impact would be with respect to elasticity and attrition and churn, we were very encouraged by the results. So that has given us confidence that we can pass this through relatively easily and see a nice flow through as a result. To your question on marketing, so we have not been a very advertising marketing driven company as you know. We expect to triple our investments in 2025 versus where we were a year ago.
And that’s based on some encouraging results we’re seeing in Q4 and some of the tests we’ve done. And so as we continue to see good results, we will turn off the knob as appropriately.

John Heinbockel

And then maybe the follow-up. Maybe talk about your pipeline, right, the ’30 to ’35, what’s the greenfield pipeline look like? And is the idea that finally we’re seeing some separation between the leaders and some others. Is the idea to keep some room there, some financial firepower to buy assets that might shake free over the next year or so?

John Lai

Yes. So it’s actually a tricky question, John. You wove in a little bit of an M and A question into your greenfield growth strategy. So, yes, we are agnostic with respect to new unit growth. We do anticipate there being a number of good opportunities coming to market over the next several years and we want to be well positioned to capitalize on those opportunities when they present themselves.
But again, we’ll stick to our disciplines with respect to quality asset, clear upside potential and most importantly, reasonably priced emphasis on reasonably priced. And so when those come available, we will do everything in our power to be at the table and then strike when the iron is hot. I want to take a second to say that buying a business is easy. It’s what you do with it afterwards. And one of the things that we have a really long track record on is post acquisition integration and buying good businesses and making them better.
So this thing has never been about grow at all costs and scale just to scale. We’re building what we believe to be a beloved brand, a legendary brand, an enduring brand. And to that end, the businesses that we are looking at have to check those boxes. We’re definitely not bottom feeders. So on the greenfield pacing, again that’s somewhat of a judgment call.
Right now the 30% to 35% we think is a prudent number given internal bandwidth and making sure that we don’t get in over our skis. And right now that’s the number we feel comfortable with.

Operator

David Bellinger, Mizuho.

David Bellinger

So comps up 6% this quarter. If you’re guiding to the 1% to 3% next year and understanding your conservative approach here. Just help us bridge that delta? Is there anything in Q4 that was onetime like whether it was weather or the positive retail comp? And just to frame this up, can you talk about what you’ve seen Q1 to date and just any type of slowdown in the business or anything that give us more (inaudible) in that 1% to 3%?

Jedidiah Gold

Yes, David, it’s Jed here. Good to talk to you. Listen, as we look at Q4, we had a really strong October. It was the strongest month of the quarter. We saw really strong growth, both UWC and retail.
Retail was up in the positive teens during October. Total comp in October was low double-digit growth, and there’s a correlation between really positive weather trends when we look at October and the results that we saw. November, it was the most difficult month of the quarter. A little softer retail volume comps were up in the low single-digit range. December bounced back with slightly positive retail trends and total comp in December in the mid-single-digit range, rounding us out to the plus 6% for the quarter.
January, similar to October but even a little bit stronger, and it was some positive weather. When we look at the precipitation levels of the markets that we operate in, and it’s weather during the week and then the sun’s out in the weekend, I think though it’s a testament to the team that we have, the layout of our operations that we’re very well positioned when the weather cooperates. There’s nobody better positioned to process and watch vehicles than Mister.

David Bellinger

Great, thanks for all that detail. And then my follow-up on the Titanium mix, I think it was 23% this quarter, that’s a step back versus Q3, I think at 24%. So you’re starting to see that penetration rate begin to top out in any way? And what are your assumptions within the 2025 guide for [Q3 60]?

Jedidiah Gold

Yes. Listen, so as we said in our prepared remarks, really happy with how titanium performed. It’s exceeded our expectations, focused then helping drive trial and adoption. We utilize some promotions to help drive it to that 25% penetration level that we saw in Q3 and — we believe some of those members who signed up at the promo price have churned out and opted out of the promotion once the promotional period ended. We see this as an opportunity, we did not build in a lot of upside into the model in continuing to drive those penetration levels.
So longer term, we see some opportunities to longer term to drive this, although it will be at a much slower rate, obviously, than what we’ve seen launch to date.

John Lai

Yes, [Jay], I just want to add, as we look at it, 60% of our membership is premium in both Platinum and Titanium, and that is a beautiful percentage

David Bellinger

Got it. Thank you.

Operator

Simeon Gutman, Morgan Stanley.

Simeon Gutman

Hey guys, good quarter. My first question, it’s back to this comp and the difference between the quarter and then the guidance. Would you say then — I don’t know, Jed or John, if maybe December is representative, you say, bounce back? Was it also helped by weather? And I’m trying to reconcile, I guess, the midpoint of two because I think that implies the way you said it, Jed, is that the discretionary customer, the retail customer, is less bad. So I assume that’s flat or negative.
So yes, [it] can put all of that together, would December be the proper run rate that’s unencumbered by weather?

Jedidiah Gold

Yes. So what we’ve built into the guidance, Simeon, is that — so in this time, retail, as we’ve talked about in the past, it’s the most difficult of the lines to forecast. We’re currently anticipating a mid-single-digit decline in 2025, which is a slight improvement from what we saw full year 2024 but it is a step down from what we saw in Q4 of 2024. And that’s because the weather provided a significant uptick to our retail traffic in October, January, we believe we saw that same weather benefit helping that retail traffic. So we believe that we’ve adequately captured what we believe the full year longer-term trend of that mid-single-digit negative decline in retail, which, by the way, and we’ve talked about it in the past, we’ve historically always had a little bit of a headwind to retail as we trade retail customers into subscription, and it’s run in about that mid-single-digit level.
So we’re getting back to those more normal levels the 3-, 5-, 10-year average that we’ve seen in more normal times.

John Lai

Yes, Simeon, I would just add. So to summarize what Jed just said, retail is improving but we’re also wanting to keep both feet on the ground. We’re not here to say that the retail customer is back, but we are seeing some encouraging signs that show that what we have experienced in the last couple of years. We hope that it will get better. But we don’t want to get in over our [skis] and call that we hit bottom.
So there’s us just being conscious.

Simeon Gutman

Yes. A follow-up, and I’m going to make it two parts because of that response, John. the retail customer coming back? Do you think it’s inflation or was capacity, meaning competition that was the biggest holdback? And then the question I wanted to ask is a competitor private who declared bankruptcy.
Curious about location overlap, the asset quality. And then there’s other assets for sale up there, and I heard how you’re approaching asset, either acquisition or growth. I guess, I mean, the dominos seem to be starting to fall, and I think that’s what your model was prepped to benefit from. Are any of these initial ones should help the business next year? Is that in the guidance range?
I don’t know what happens with these assets, but should there be a benefit to that as well?

John Lai

Yes. So to answer the second part of your question first, there’s not a lot of overlap with the company that you’re referring to on our existing portfolio. So we don’t expect there to be a the positive impact to our business as a result. That said, as the industry rationalizes and there’s some folks that are under some distress right now where we do have some overlap, that should help us in theory, but I think it’s going to take a while for all of that to flush out. And as a result, we see any boost to the business in the near term.
But over time, in theory, again, it should — the first part of the question was retail?

Jedidiah Gold

Yes. Retail and competition.

John Lai

Yes. And just — so Jed and I can both chime in on this one, but it’s really a combination of both, right? And if I were to [wait] one versus the other with respect to just the retail consumer under pressure to inflation and/or competition is probably more slightly heavily weighted towards the competition and competitive intrusion, then the consumer pressure as interest rates start to come down.

Jedidiah Gold

So Simeon, I think to build on that, and you wrote about this after our Q3 post earnings group call that you hosted, when we look at the performance of stores with competition within a 3-mile radius in the age of that competition, those stores that have a competitor that opened within a 3-mile radius, we see an impact that last about 18 months to two years, and then those customers begin to come back. And that’s been a consistent theme. We’ve been watching this trend for the last about eight quarters. And in Q4, it was even more pronounced, where those stores where the competition is greater than two years old, they’re comping much stronger than the plus [6] that we recorded on the quarter.

John Lai

Jed, can I add some color to that, too? When I talk to GMs that have been impacted during that first 18-month period, and then I say, what are you hearing from customers as they have come back? They will say, we missed the wave in the smile. We missed the appreciation that your frontline team members gave us. And at the end of the day, there’s this relationship, and there’s this human connection that we have established with our customers.
And it’s not a transaction purely right? It’s — there’s an emotional connection, and that’s really our secret sauce.

Simeon Gutman

Thank you both.

Operator

Justin Kleber, Baird.

Justin Kleber

Hey, good afternoon, everyone. Thanks for taking the question. John or Jed, just a follow-up on the M&A front. You guys obviously are in a good spot to take a leading role in consolidating the industry. Just curious what your appetite is to take on additional leverage just given the current rate backdrop?

John Lai

Yes. I think, again, when we look at some of the multiples that are starting to contract and really through the lens of where we see the upside potential and how we can lower that effective multiple. If we had to take on some additional leverage, but then we can delever over time as we grow the bottom line. And we have a clear path to growing — it starts with top line and then bottom line, we’re willing to lean in a little bit on leverage.

Jedidiah Gold

And I think, Justin — I mean that’s where the healthy debate, right, that comes in is — it’s so what asset are we acquiring and taking leverage up? And is there a path to bring that leverage back down? And how high is our confidence in being able to bring the leverage back down within that 2% to 3% range that we spoke to. We always talk about this as to how high are we willing to go to leverage just as important as how high are we willing to take leverage, what are we actually purchasing which is a key part of that as well.

John Lai

Yes. And we take it a step further, we look at it [lease] adjusted leverage. And so we’re really looking hard at some of the rents that have been assigned to these stores. And quite frankly, there’s so many folks that have pushed the envelope and saddle the stores with — as another form of leverage, high rents through sale leaseback financing and it makes it even that much more difficult for us to get comfortable with the business if you have just a big rent nut that will take a long time to hurdle the business.

Justin Kleber

And just an unrelated follow-up on as we kind of decompose the revenue growth for ’25, just any color how you’re thinking about or how you’re modeling UWC member growth this year?

Jedidiah Gold

Yes. So on a comp store basis, as we think about membership growth, slightly positive membership growth, Justin, is what we’ve assumed in the high end of the guidance, the plus 3%.

Justin Kleber

Alright, thanks guys. Best of Luck.

Operator

Michael Lasser, UBS.

Michael Lasser

Good evening. Thanks so much for taking my question. John, are you seeing evidence that the consumers attitude towards signing up for a wash subscription is changing, particularly versus a couple of years ago when the novelty of this innovation and introduction in the industry was newer. And the reason I ask is while retail trends are better, the weather — the business does seem to be coming more weather-sensitive and member per location has been under pressure probably in part by some of the newer locations that you have added and those are still ramping up. But it does seem like member growth is subdued and Jed just mentioned that you only expect modest growth in total members or same-store members at the high end. So presumably, you’re expecting some degradation in members at the low end of the comp range? Thank you.

John Lai

Michael, thanks for the question. So at the very core, we believe that the subscription TAM is undersubscribed in that when we zoom out and look at the US car park and the number of folks that we’re estimating have a subscription plan today, we see room for growth. When we look at — and so more nuance to your specific question around have we seen any customers less willing to sign up? The short answer is no.
Our capture rates have remained very consistent, which again tells us that there’s a whole lot of people that, frankly, are new to the express exterior category, but they’re also unaware and they’ve — didn’t realize that we have a wash as often as you like for one flat monthly fee membership plan. And when we introduce that to them, they’re signing up in historical ways. So we’re going to continue on this path, and we’re uncertain how high the trees will grow. But listen, we have a whole bunch of stores in our portfolio, they are north of 10,000 members per store. And once you convert a customer into membership and they keep their car clean all the time, it’s really hard to revert back to [having a dirty] car.

Jedidiah Gold

And Michael, just to add to that a little bit. One of the data points that we’ll look at, right — barometer as to whether consumer behavior has changed and how they feel about signing up is that capture rate capture rates have been consistent at about that kind of 9% to 10% level fairly consistently for the last few quarters. And then just one clarification for everybody on the call. The slight membership growth, that’s a comp store basis. As we think about total member growth, we expect about a single digit.
Obviously, the greenfields coming online being the biggest driver of that total membership growth.

Michael Lasser

Thank you for that. My follow-up question is, as you laid out your one to three comp expectation for the year with stronger trends in the first half and [soft] returns in the back half. And the comment that you have started off January with double-digit retail comp would you expect at the low end of the range for comps to be negative in the second half of 2025? And why would that be the case?

Jedidiah Gold

Michael, no, we’re assuming positive comps in each quarter throughout the year, just slightly stronger in the first half than the second half and just slight and — listen, what we’ve seen in February is those retail volumes and comp store sales growth has moderated to be more in line with our expectations to where we believe our plan and forecast is close to in line with what we’ve got built into the guidance.

Michael Lasser

Thank you very much and good luck.

Operator

Chris O’Cull, Stifel.

Chris O`Cull

Thanks. First, I had a follow-up question, Jed, on regards to the recent comp trend. And how should we think about the impact of weather and its impact on the subsequent period? For example, I think you said October was strong because of the weather, but November was a sharp pullback, is that the type of dynamic we should think about when a period is impacted by strong weather?

Jedidiah Gold

Chris, it’s a good question. I don’t think we’ve done enough analysis around that for me to say definitively on a call like this. I think it could just be conjecture. And anecdotally, I mean, that’s what we saw in Q4. It tends to be what we’re seeing in Q1, but I’d want to go back and look at this even closer before I said anything definitively.

John Lai

Yes. Chris, I will say, though, I’m getting a little reminiscent right now going back in time where we literally would start every morning by looking at the weather report. And I don’t look at the weather report anymore and not to sound cocky, but we’ve made our business less weather dependent with subscription. And when you have 75% of your business that’s recurring and predictable, we’re really talking about that other 25%, which is really the basis of your question. But we thank our lucky stars every single day that we’ve built this really, really strong number base that makes us a lot more stable for the long haul.

Chris O`Cull

And then I know you have several marketing tests and programs underway. But John, what do you believe will be the key drivers for retail sales growth this year?

John Lai

Yes. So I think we over share on this one. But our version to discounting and in making sure that we don’t give away the farm and dilute the value of our brand is really, really important to us. And when we think about how we’re positioned in the marketplace, we have — we’re delivering a premium experience. We think that the customers get premium value, and it’s really what makes us special.
So to be honest with you, we’re more focused at least right now on brand building versus discounting and talking about the unique and special abuses of our business versus just looking at price, price, price. So to that end, we’ve talked about some of the different channels that we’ve been experimenting with and some of the different offers, and we want to start small and can measure and then iterate from what we see. And again, there’s been some neat things, but nothing that has materially moved the needle as of yet. But that’s not going to stop us from continuing to test, and we have a number of pilots going on right now. And we will — this is an ongoing effort for us.

Chris O`Cull

Great. Thanks guys.

Operator

Philip Blee, William Blair.

Phillip Blee

John, thanks for the question. Your 2025 earnings outlook has been higher than expected under this kind of comp sales scenario. Can you talk about your confidence there generally around expense control versus some of these pressures from labor costs that you’ve talked about? And then how we should think about any potential for incremental margin fall-through on sales upside here?

Jedidiah Gold

Yes. I think, Phillip, as we think about the expense and particularly as we look at EBITDA, I mean I think our confidence is — I mean, it represents our best thinking at this point in time. Just as a reminder, as you recall, in 2024, we had two big tailwinds with the chemical optimization that we start to anniversary in January of 2025 and then also the tailwind of the optimization of our interior clean labor, which we start to anniversary late Q1, early Q2. So we had a little bit of a tailwind that we’ll see in Q1 from that labor optimization right now, nothing that we’re going to speak to as far as other optimization programs. But I mean, I think this really is where, and I shared it in my prepared remarks, it’s the team thinking like owners.
And what we’ll see is different savings initiatives, a few hundred thousand in savings here and there across the P&L, just given the fragmented nature of some of the expense management across the team. So from an EBITDA margin perspective, kind of first half, second half, it’s actually relatively consistent throughout the year, just given the top line and how the top line flows throughout the year. So we expect the tailwind of titanium helping drive the top line in the first half and then the base price increase that we talked about in our prepared remarks, helping drive the second half of the year. both of which flow through very nicely and help drive modest margin expansion.

John Lai

Yes. Can I just — I always got to do this with Jed, just to make sure that we’re on the same page that margin expansion has not been our highest priority. We know that it’s important. We definitely don’t want it to go backwards. But the investments that we continue to make in our business, particularly on the human capital side, are meaningful and they’re front-end loaded.
And for us, it’s absolutely critical to our long-term success. So don’t want to pull back on that throttle. We want to keep our foot on the gas with respect to investing in the future. And that comes in an investment cost.

Phillip Blee

And then I just wanted to ask a quick question then going back to kind of the competitive space. You spoke a bit about it, your expectation for this to be rationalizing over the next few years. Can you maybe double-click on that with more of a focus on 2025. Have you started to see some of these share gains materialize with some of this early rationalization? Any sort of that embedded in your current outlook?

John Lai

So short answer is no. But we’re right on the precipice of things starting to happen and again, what is out there in the news. There’s some distressed assets that are under a lot of pressure right now. And again, for us, it’s more about the quality of the asset, its less about the value of that business. But there’s really just — there’s a mixed bag.
And then there’s some really good stuff out there that they command a premium, and we want to look at those as well. So there’s some good, there’s some marginal, there’s some under deep distress. And from a competitive intelligence standpoint, have a pretty good finger on the pulse through kind of a traditional spot analysis of what their strengths are, where the opportunities lie and really strategically the why behind why it makes sense for us to lean in. And through two different lenses. One would be strengthening our position in existing markets.
So if we have a strong hold, but we’re able to double down and increase our market share through a, I guess, technically a bolt-on, but where it would materially improve our position in a market that’s strategic wide is answer for us. The other one is if there’s a new geography that we find attractive that allows us to continue to expand our footprint, ideally adjacent, but that’s not always the case then that helps us also fulfill our more global ambition, which is to continue to expand and become America’s Car Wash.

Jedidiah Gold

And then just to build on the second part of the question, we don’t build any [NA] into our guidance, into our outlook. It’s timing perspective and how this rationalization plays out, it’s difficult to predict, starts to become fairly speculative. So we choose not to build that in as an input into the model.

Phillip Blee

Okay, great, thank you. Guys appreciate it.

Operator

Peter Keith, Piper Sandler.

Peter Keith

Hey, good afternoon. Nice quarter, guys. John, I think you have a really good view of the industry. And I’m wondering if you could frame up what you believe the number of new openings industry-wide were in ’24 and then if you have an estimate on where that could land for 2025?

John Lai

Well, Peter, you might have better intelligence than I do, given how active you’ve been in the space, and I’m saying that with a smile on my face because I know you’re talking to a lot of folks. And I think there’s probably — I’d be naive not to think there’s a couple of OEMs on the call listening as well who have a really good figure on the pulse of that. So mine is less informed. But if you were to ask me to throw out a number, I would say 2024 was perhaps in the 550 range of units, and there’s a margin of error inside of our estimate.

Peter Keith

Well, I’ll try to get back to you on 2025, myself. Maybe I can pivot to Jed. So the sale-leaseback proceeds are stepping down quite a bit year-on-year. I don’t think it’s going to have an impact, but I did want to ask about that large bankruptcy and if that’s caused any volatility in the sale-leaseback market, that’s always been a concern amongst a lot of operators that could kind of dry-up sale-leaseback proceeds. Is that an impact for you this year?
Or is it just more of a timing dynamic with the pace of openings in recent years?

Jedidiah Gold

Peter, we feel good about the trends right now in the sale leaseback market. 21 closure — closure on 21 transactions in Q4. The whisperings and rumblings of some of our competitors that were struggling. We’re already fully baked and out there publicly. High-quality assets are being sold at better cap rates.
There’s a market for them. We’ve had an influx of calls, if anything, since the announcement of our competitor and some of their financial struggles, particularly relating in that [1031] market, people wanting to buy these. Our focus this year as we look ahead to 2025 is really how do we drive cap rates even lower given this outsized demand from buyers that are interested in purchasing misters. So feel good about our ability to earn the 40% to 50% purely strategic. And just given the amount of cash that we currently have on the balance sheet now and our ability to fund our growth and expansion plans for 2025 and 2026.

John Lai

Jed, the only thing I would add is that when I talk to some of the REITs, so certainly, there’s the economics around the business and how that pencils out in terms of the coverage ratios and rents as a percentage of sales. But what I’m also hearing is that they’re putting more weight against the quality of the tenant and having a best-in-class operator with a solid balance sheet is super important to them. And so it’s hard to paint a broad brush when they look at Mister Car Wash and how well we perform, how responsible we’ve been with respect to (inaudible) super high rents and pushing the proceeds line and just seeing how, one, we pay our rent consistently on time. But if you’re going to pick a carwash operator to partner up with, you want someone that has a long track record and so we check that box.

Peter Keith

Okay, very good. Thanks so much.

Operator

Tristan Thomas-Martin, BMO Capital Markets.

Tristan Thomas-Martin

Hey, good afternoon. Just one question for me. The base price increases, could this may be a leading indicator of a more normalized cadence of price increases? We all see one before another [15]?

John Lai

Yes. So our cadence is once every 15 years, I don’t know if your spreadsheet goes out that far.

Tristan Thomas-Martin

It does not.

John Lai

That was my attempt at spreadsheet humor (inaudible) anything funny about a spreadsheet . But no, listen, Costco is one of our North Star is once every 5 years, right, and for us to be even more conservative than Costco. So we continuously reevaluate our position in the market. We want to look at our price-to-value relationship and then really understand where the market sits and then cautiously take pricing when those opportunities arise. But as corny as it sounds, we believe we need to earn the price increase.
We need to consistently deliver great value to the customer. And our business is unique and that it’s this repeatable business. So you have to earn their business every single day, every single visit. And people could be very particular, very finicky when it comes to their car. And if we’re not getting a clean dry shiny car.
We’re not doing it in an efficient speedy way. And if our people aren’t showing our customers the respect and the love, if you will, that are looking for. We don’t feel that we have a lock on anything. So we have to earn their business every single day.

Tristan Thomas-Martin

Okay, thank you.

Operator

Robbie Ohmes, Bank of America.

Robert Ohmes

Hey guys, thanks for taking my question. Actually, just one question. I apologize if I missed this, but I saw that you guys put in the guidance CapEx of $275 million to $305 million. I think it’s been running more like [$3.3 million] the last couple of years. Can you just remind me what the changes this year versus the last couple of years?

Jedidiah Gold

Yes, Robbie, it’s pretty — I mean, pretty straightforward. So largely, it’s due to a fewer number of new greenfields planned for this year. And we are seeing a slightly higher mix of ground leases in some of our new openings this year versus next year. Obviously, you don’t have land purchase. So it’s a reduction of the total CapEx.
But as we look at the core store CapEx, it’s consistent with what we’ve seen over the last 3, 4, 5 years, about $100,000 per store.

Robert Ohmes

Terrific. Thanks that clarifies for me. Thanks so much.

Operator

Christian Carlino, JPMorgan.

Christian Carlino

Hi, good afternoon. Thanks for taking our question. You had previously talked about opening more than 40 locations this year and understanding you’re being more surgical about your opening plans. So could you just speak to what was it about these stores that don’t fit the updated rubric? And given the time line to open a store, are these sites where you’re just delaying construction that will open next year? And then just to wrap that up, I guess, what is this refreshed approach to greenfield openings mean for your long-term unit growth expectations beyond ’25?

John Lai

Yes, I’ll start and then Jed, you can chime in. But as we reassessed our entire pipeline against this more competitive backdrop, we needed to be even more selective with respect to what we believe the impact be with those competitors. And we’ve learned a lot over the last several years. So if someone is first market, they will have an advantage. If there’s — if we get caught by surprise where as much diligence as we do, we determine post going hard on a deal and then beginning the process of all the engineering work and the architecture work, et cetera.
We find that there’s a new car wash within a 2- to 3-mile radius. We need to reevaluate what we believe that store’s potential to be. And again, remain disciplined. If we don’t think it’s going to get to what our minimum expectations are, then we need to make a decision on whether or not we want to move forward. So to that end, we’ve [skinnied] it down a bit and tightened it, if you will, to ensure a greater success rate.
And we think that that’s prudent as we continue this March. So it’s not about hitting any set number per se. And for us, we want to be very intentional with respect to how we grow.

Jedidiah Gold

I mean at this point, we’ve opened 140 greenfields. We’ve learned a lot. We’re taking these learnings, and we’re really adopting them to the future earning process. So to John’s point, we had a handful that fell out of the pipeline because of the — as we rescored these. — before we really started to incur larger development costs.
We also had a handful that were delayed just as we go into certain markets, the [permitting approval] process taking a little bit longer, and that’s just going to be a timing things, those will open in 2026 now instead of 2025. And I mean given the long lead times to open new stores, we weren’t in a position to refill the pipeline, so to speak, to get us back to that plus 40%. But our fundamental view on greenfields is it’s unchanged. We remain confident in our greenfields and how our greenfield expansion and the ability to develop in our target markets. We see several sites in the pipeline, and we continue to search out new sites that meet our strict criteria.

Christian Carlino

Got it, that’s helpful. And a follow-up, that’s my — to follow up on some of the earlier questions, you said there’s no near-term impact from the competitor bankruptcy. But in that context and the fact that the industry is slowing openings significantly relative to the past few years, what does this mean at a high level for the industry? Like is this recent competitor unique? Or are there other big platforms in a similar position? And sort of a tangent is — does that see [speed deceleration] in openings for the industry have any implications for your own growth plans with respect to your equipment supplier’s financial position?

John Lai

Yes. I can’t speak to their position. I think they’re doing quite well, though, even with a slight decel in new unit growth. But long term, we look at it through kind of a regional lens versus a national lens and on a regional basis. Over time, this is our prediction that there will be market 3, maybe on the high end, 5 dominant players in any one region.
There will never be one person who owns a 100% market share that’s not realistic. And so just hanging on the 3 number, if there’s three strong players in every region, in some cases, more some cases, less. They will continue, and we will expect to be part of that continue to strengthen and fortify their platforms in market and continue to grow. So there will be — our prediction is that there’s going to be more consolidation over time and that some of the folks that were in this not to build an enduring brand but to hopefully monetize at some point. They’re now starting to ask themselves when is the right time to monetize.
And again, it’s going to be a really interesting next several years. And we think we’re perfectly positioned again to capitalize on some of the opportunities that will present themselves.

Christian Carlino

Got it. Thank you very much. Best of luck.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. John Lai for any closing remarks. Please go ahead, sir.

John Lai

Well, thanks, everyone, for joining the call. Whenever I go into any one of our markets, I always start with the smallest store in our portfolio and work our way up. Some of our team members like to go to the big dogs and the Taj Mahals. But for me, it’s really the litmus test of how well we’re performing. So this morning, I went to a store that has over 40 years on the odometer here in Tucson called Broadway and Euclid.
And I was pleased to see the wave and the smile. We were — I was whisked through the tunnel, a car came out virtually spotless and in under 5 million minutes, I was on my way and I was feeling great. And to me, this really epitomizes who Mister Car Wash is. So across now north of 500-plus stores, we’re only as good as our weakest link. And every single store is critical to our equation.
We built a really strong wave, a really strong infrastructure, and we’re executing day in and day out. So I’m super proud of the team. We’re really looking forward to 2025. We’re very optimistic about this upcoming year, and we can’t wait to share our results in the next earnings call.

Jedidiah Gold

Thanks guys.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.