Q4 2023 Mister Car Wash Inc Earnings Call
We have already surpassed that goal, and titanium penetration levels are running over 15%. With that said, let me run you through the fourth quarter numbers. In the fourth quarter, total net revenue increased 7.4%, and comparable store sales increased 0.7% versus last year. UWT cells represented nearly 74% of total wash cells, and we added 6,000 net members in the fourth quarter.
On a year-over-year basis, the number of UWC members increased 10.3%. The performance of our subscription business remained very stable in the quarter; core churn rates outside of the titanium promotional offering remained in line with the historic ranges. On the development side, we opened 14 new greenfield locations in the fourth quarter, which was a quarterly record. Greenfield returns remain very strong and continue to be the highest and best use of our capital.
On the expense side of the business, we remain focused on managing expenses and optimizing the investments we are making to support the long-term growth and development of the business. We are also identifying areas where we can leverage our scale to drive efficiencies and do even more with less. Excluding stock-based compensation and as a percentage of revenue, total operating expenses increased 170 basis points to 81.2% year-over-year.
The main drivers were labor and chemicals decreased 53 basis points to 28.9%, other store operating expense increased 175 basis points to 40.6% gna expense was flat at 10.1%, and Galen Lawson on the sale of assets increased 45 basis points to 1.6%. The labor and chemicals benefited from better staffing models focused on maximizing throughput and delivering a great customer experience. Our team works with a sense of purpose, and it's one of our strengths. This was partially offset by an increase in average hourly wages. Other store operating expenses increased primarily from an increase in rent expense and from the fact that we have 45 more car wash leases compared to the same time last year as a result of the additional cell lease backs done over the 12 month period. In the quarter, cash rent expense increased 13% to $26 million.
G&A expenses excluding stock-based compensation expense as a percentage of revenue were flat year over year, and we are starting to leverage the growth investments made over the past few years. In the fourth quarter, interest expense increased to $20 million from $14.9 million last year due to higher interest rates and the expiration of our interest rate hedge in October of 2022. Our gap reported effective tax rate for the fourth quarter was 26.8% compared with 25.1% for the fourth quarter last year.
Adjusted net income and adjusted net income per diluted share, which add back stock-based compensation and certain non-core operating expenses, were $24 million and seven cents, respectively, in the quarter. Fourth quarter adjusted EBITDA was $69.5 million, up 5% from the fourth quarter of last year. Adjusted EBITDA margin was 30.2% versus 30.9% in last year's fourth quarter. Moving on to some balance sheet and cash flow highlights At the end of the year, cash and cash equivalents were $19 million, and outstanding long-term debt was $897 million.
Our balance sheet remains healthy, and we continue to self-fund our growth and expansion. We completed five cell leaseback transactions involving five car wash locations in the fourth quarter for an aggregate consideration of $23.8 million. We continue to see healthy demand at favorable rates in the Southeast back market. Lastly, let me make a few comments on guidance and some of the factors that help shape our initial outlook for 2024. First, we expect to open approximately 40 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. The timing of these openings will be back half weighted with an estimated 30% of the first half and approximately 70% of the second half.
Second, we will continue to promote titanium across various markets to drive trial and adoption, particularly across our base of approximately 2.1 million Unlimited Wash Club members. Once customers experience the speed and convenience of being a member of our Unlimited Wash Club or the shine and efficacy of titanium, the majority of them recognize the value and continue with the program beyond the promotional pricing period. We tested this to varying degrees last year, and we'll be relaunching introductory pricing promotions in certain markets this year to help drive trial and adoption even further. This will drive titanium penetration rates, but will also put some short-term limits on revenue lift and flow through from titanium this year, particularly in the first half. Third, last year we grew UWC by just over 10% with 35 new greenfield openings and six acquisitions.
This year we are targeting approximately 40 new greenfield openings and focused on driving titanium conversion and revenue per member. Fourth, we expect GNA growth to slow a little, 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. Lastly, we are not anticipating any changes in the macro environment.
Many consumers remain challenged, and we have not seen a meaningful consolidation across the industry yet, which we think warrants a certain level of cautiousness in building our initial outlook for this year. The whole list of our initial Outlook ranges for 2024 can be found in the table in today's earnings press release. In closing, I would like to thank the entire Mr. Team for their work and dedication. We are a team that cares for one another and our customers. 2023 was another important year in our long-standing history.
We came together as a team and delivered strong execution and solid results. And it's a testament to the culture and type of people that Mr. With that, we are happy to open the call to questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.
Peter Jacob Keith: If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Our first question comes from Peter Keith with Piper Sandler. Please go ahead. Hi. Thanks. Good afternoon, everyone. Hope you're doing well.
I wanted to follow up on a couple of the comments you made around the titanium 360 rollout. For example, you mentioned that you've already reached 15% penetration. That was a little bit confusing, so I'm wondering if that was at some of the earliest test stores. If you could clarify, and then, secondly, you mentioned the probably limited benefit from T360 in the first half, and I guess that, I think it's from promo pricing, but maybe you could just help us understand, well, you know, promo pricing is driving no benefit, but you're already at 15% penetration in some stores. Yeah, hey Peter, this is John.
Good to hear from you. We're still in execution mode, and we're going to get better at upgrading our members over time. We are ahead of where we thought we were going to be at 15%. We expect that number to grow, quite frankly.
But with respect to the promotions that we have put in place to encourage early adoption, we are now just on the cusp of having those promotions roll off, and we're going to enjoy, I think, a nice tailwind from a revenue standpoint as we, you know, get further down the road here as the months progress. Yeah, Peter, just a little bit more color around that and the impact of titanium in Q4. You touched on that, right?
So overall, pleased with titanium, how it's mixing, right? Mixing just north of 15% overall, but the impact during Q4 was just a little bit muted because of some of the promotional offers that we are using to drive trial amongst our members. Okay, very good. And then maybe on the retail side of the house, there was a little bit of softness in the back half of Q4. Any observations on what's driving that? It seems like the retail side, probably industry-wide, just can't seem to get off the mat. And then maybe any commentary on Q1 with some of the erratic weather?
Is that something we should keep in mind as we're modeling our Q1 comps? Yeah, Peter, so you touched on that, right? So as we've talked about that retail volume, it is a little bit more susceptible to some of those job exogenous factors such as gas prices, right, some of the discretionary spending events, gas prices, and also competition having some impact on the retail side of the business as well. But retail comparables, and in the second half of q4, they did moderate from from where we were seeing them at the time of the q3 call, to where we overall And as we look at how that's translated into Q1, it's really, really tricky to say Q1. 2024.
Just because of the extreme cold, the weather throughout much of the country, last year we talked about the impact of the weather on business. As we look at the number of precipitation days in those markets where we operate, it's actually higher this year, even than it was last year when we looked at it during January. Overall, January comp was still positive, but it did fall short of what we were expecting. So it's really difficult to come to any conclusions just because of the early quarter weather impact that we saw.
I would say for Q1 2024, we do expect positive comps just given how we typically see the months play out, March being the stronger month historically for the first quarter. Okay, very good. Thanks so much and good luck.
Justin E. Kleber: The next question comes from Justin Kleber with Baird. Please go ahead. Yeah, hey guys. Thanks for taking the questions. Good afternoon.
Just a follow-up first on titanium. The market that got the service, I guess, almost a year ago, kind of where is the penetration? trending in those areas?
And then can you isolate what type of Game Store Sales Uplift you're embedding in that in the 24 comp outlook from Titanium? Yeah, so I don't know if we're going to be able to drive or you're going to be able to drive much from the early regional launches, because quite frankly, we weren't promotional. We were launching and focused more on product efficacy and making sure that the product profiles were where they Once we got those in place, and we checked the quality and performance boxes, we then started to find more effective ways that we could trade people up. So the RPC lift, I think is, again, something that we're going to enjoy going forward. And I should say RPC and RPM.
But for the early stage regions, there's really not a lot to draw upon. And then, Justin, the second part of your question: just the full year 2024 guide of 0.5 to plus 2.5. So from a titanium mix, we're mixing at about plus 15%. I think the variable there is how quickly we get these markets on regular way pricing, which, as John had highlighted, we're moving quickly toward. And then there is the variable of what happens to retail sales performance. To get to the high end of the guide, the plus 2.5%, you don't have to model an improvement in the retail trend that we saw in Q4 in order to get to the plus 2.5%. Got it. Okay. That's very helpful.
And then, John, you talked about having a strong balance sheet and access to capital. So the question is around what you're seeing in the M&A environment and how comfortable would you be taking on additional leverage if there was a transformative M&A opportunity that became available at a reasonable price. Yeah, I'm going to kick that one over to Jed because he's our leverage king with respect to the balance sheet.
Yeah, Justin, so when you look at this business and just the amount of free cash flow that's generated, right, there's a lot of cash, a lot of that's committed right now for Greenfield. When it comes to leverage, we ask ourselves, what are we going to use the leverage for? And if the return profile is where it makes sense, then it's an acquisition that's going to fit in with the broader portfolio. We're going to be strategic and opportunistic about M&A. Having said that, we do recognize that we're sitting at the high end of the 2 to 3x target that we've put out there, and it's going to have to be a really good asset for us to invest in.
Yeah, and Jed, I would add, though, that we can justify leaning in when we can pro forma out year 2, year 3 growth, which will lower that effective multiple, which will help us get our ratios in line or in a better place. So if there wasn't a good opportunity, we certainly would take a hard look at it. The one other point there is I think this is where being the only publicly traded car wash does serve as a little bit of a differentiator, where we have equity, in theory, for the right asset. And if the seller saw the upside and the synergies of a combination between Mr. Clean and their platform, where potentially, equity would serve as a currency on a larger scale acquisition. I got it.
John Edward Heinbockel: Okay. Makes sense, guys. Thanks and best of luck. The next question comes from John Heinbockel with Guggenheim. Please go ahead.
Hey, guys, I want to start with a question, you know, with regard to pricing on titanium, right? So you talked about promo pricing and regular pricing. So I guess regular pricing. Are you settling in at 39 99? And is the promo pricing, you know, sort of roughly half of that? So that's sort of number one.
And then as part of that, right, John, when you think about you guys have always used retail as sort of the feeder for membership, is there a good way or a way to not use retail to kind of, as you densify, just attract members, you know, without them being retail first? And can that move the needle? Yes, let me answer the second part of your question first. So, we have actually thought really hard about that particular question. And our belief originally was that someone needed to come in and try us through a retail purchase first, and then we would wow them with our excellent service delivery.
And then they would be more apt and receptive to moving into a subscription-based membership plan. We've actually turned the tables on that, and we're actually leading now with membership. Because what we found is that it was taking too long of an articulation, and we were perhaps protracting that time horizon.
So, in our new approach, we're finding it's actually working. And it's dispelling what was conventional wisdom inside of our own belief system, which was that we wanted to take this slower boat approach to membership growth. So, we're doing just that.
To the first part of your question with respect to promotional pricing. Yeah, we're still experimenting with a couple of different approaches, and we want to actually move away from the price value piece of it, but we also know that it's a very effective lure slash hook to get folks interested in trying it, but we really haven't settled in and established something that we think is going to be, you know, the game plan in perpetuity because we're constantly refining, constantly reassessing, and So, as Jed alluded to in his opening comments, we're really, really pleased with where we sit today in terms of the percentage of our existing members that have traded into the program, and we've got a lot of momentum, John. There's a lot of, a lot of untapped potential.
And when you have an embedded base of over 2.1 million members, you know, it is really where our focus is right now, which is trading those existing members up into our premium plans. And we're excited about what we said. Secondly, if you think about intensifying, right, what you're doing, and some others are too, are we reaching a point where that is acting as an impediment to someone thinking about coming into a market? And when do we get, I mean, it seems so obvious that when you look at other sectors and how they've progressed, that at some point here, you know, we need to see significant consolidation regionally and maybe start I wonder how far away we are from that, with people still raising money and, you know, with the amount of private equity participation. Do you think we're still a couple of years away from that process?
So the market has been consolidating pretty aggressively over the last, I'm going to say, five years. But it has cooled, and it's cooled primarily due to prices that have gotten a little wonky, folks that have really pushed the envelope with respect to sale-leaseback financing, and quite frankly, have run out of growth capital to fund their ambitions. And that cooling effect, I think, is healthy and long overdue
So we're seeing contraction of multiples, and as prices come down, that will create more opportunities for us going forward. But with respect to the competitive moat, if you will, and densifying our existing footprints, we still have a long runway to go inside of the close to 70 MSAs that we're in to get to a point where we think that we've got a strong enough position that would prevent a whole lot of folks from thinking about coming into our own backyards. And we are seeing less encroachment than we have seen over the last several years.
Jason Haas: Folks have really started to say, hey, the AUV profile that was five years ago is a little bit different today because the pie is getting sliced up a little bit thinner. Thank you. The next question comes from Jason Haas with Bank of America. Please go ahead.
Hey, good afternoon. Thanks for taking my questions. Um, it looks like the guidance to do the math right implies some margin compression in 24 on a year over year basis. Yeah, I can use that one.
Anything to be aware of there in terms of margins? Yeah, so listen, Jason, first of all, good. Good afternoon.
Good. Good to talk to you Overall, when you look at the guide, overall trends are, for the most part, in line with 2023. The two points are where there's a little bit of compression.
The first is on the store level rent, as we've done more sell leasebacks, and we plan to do more in 2024. It'll create just a little bit of compression on margin.
The other piece is on the labor side, particularly with Greenfields when we run a full labor load, but the store hasn't fully ramped up. The reason we didn't see that as pronounced in 2023 is that we had the labor staffing, the optimization of the labor staffing model that really offset that. We discovered that in Q4 of 2023, won't have that benefit helping offset it, so creating just a little bit of labor compression. Yeah, that's great. That's helpful.
And then as a follow-up, maybe going back to the competitive environment, you know, it's just a good thing to hear that it got a little bit less competitive for locations and acquisitions. But what about on the pricing side? Are you seeing any easing of competition there? Does it mean it is pretty competitive in terms of pricing, especially on the retail side? Thanks. Just to be clear, are you talking about the prices for car washes?
Yep, that's right, and what we're seeing from a competitive landscape perspective, just to be clear, or you talk about our own pricing strategy, what you're seeing from the competitive landscape perspective. Yeah, so I think things have cooled a bit. There are some folks that have chosen to get – I can't speak to anyone else's strategy but our own.
But when we assess the marketplace where we sit vis-a-vis the bulk of our competitors, we're kind of right at the median. And again, I think in this kind of consumer environment, it's not the best time to be taking prices. And so I think everyone's kind of feeling it.
And we're not the only ones that are experiencing some retail softness. So if there's retail softness out there, it really does not create the type of environment where you think that you can pass through additional price increases. Thank you. Thank you. Yeah, and Jason, and for the rest of the call, just one point of clarification on the guide, the full year 2024 comp store sales guidance is a plus.5 to a plus 2.5. There'll be a correction to the 8k that went out earlier with that correction shortly. I got it.
Michael Lasser: Thanks for clarifying that. The next question comes from Philip Blea with William Blair. Please go ahead.
Hi guys, thanks for taking the question. You spoke about the ongoing shift to focus on the upward migration with existing membership. Should we then expect membership to decline throughout 2024 under the current guide? If so, what should we do?
Yeah, we don't expect it to decline. We just think that growth is going to moderate because of our focus on upgrading existing members. And as I mentioned in my opening remarks, we're repositioning our guest services specialist to be positioned in the members lane, and that old adage of taking existing customers and increasing the value of those customers versus trying to acquire a new customer, that's our primary focus, which is going to result in a slowdown in net member growth. We'll still see some growth, but just not at the same rate. Okay, and then is there a certain target that, I guess, you have for upward migration here? Or, to put it another way, is there a certain point where you shift your focus back to new member additions?
And how do you determine that balance going forward? Yeah, for us, it's really hard to set targets, particularly for a new product launch. What we don't want to do is underestimate the potential. If we look back at our pre-titanium mix between our former premium package, which was platinum, and our base, we enjoyed close to a 60-40 shift or mix ratio of premium to base. And so we would love to see that ratio remain the same, but confined inside platinum and titanium and then perhaps growing over time. But we don't want to limit ourselves.
Tristan M. Thomas: So we're going to continue to focus on member upgrades until we start to see a slowdown, and then from there, we'll shift. But we can consistently reassess where we sit, but right now, we are so early in this adoption curve that, you know, this is going to be, I think, for the bulk of 2024 our focus. Okay, great. Thanks a lot.
I appreciate it. The next question comes from Michael Lasser with UBS; please go ahead. Good evening.
Thank you so much for taking my question. Is it fair to say that across the wash industry, the cost of business is going up as a result of higher membership acquisition costs, higher labor rates, higher rental rates, and this is offsetting the benefit from higher revenue per member, which is putting downward pressure on the profitability of the sector, and this is going to continue? Michael, this is John. You broke up just a little bit there, but I think I got the gist of your question.
So I think from a business, you know, fundamental standpoint, if you can grow your revenue line faster than you can grow your expense line, then that's the name of the game. That's the goal. And that's what we're focused on right now. So with respect to some rising input costs, you know, and I can look across the board, and it's the things that, in your earlier comment, everyone's experiencing, you know, how do we increase our ticket average? And how do we increase the lifetime value of our members? And so, while you all are focused on near-term performance, and we want to deliver near-term performance, we're looking at this thing through a longer lens, saying lifetime value. And Jed, is lifetime value a gap measure? Not quite.
It's not, but it really is what our holy grail is, which is taking a customer that washes relatively infrequently and changing their behavior and having them adopt a super premium plan. And if you think about it, Michael, it's an interesting time for us to be launching a premium offering without really taking any historical price increases on the base side. And if I can go down that path for a second, in this somewhat tepid environment from a consumer standpoint, the fact that we still have this value offering at a $10 base retail, $19.99 unlimited wash club, to appeal to that more price-sensitive customer or member, while we launch this super premium, which will ultimately—and I didn't really answer John Hombachel's question about price point for titanium, but if it's going And that's why we're super excited about what we're seeing in this very early stage of our launch. Yeah.
And Michael, just to add a little bit more color there, I think, first of all, all industries are exposed to the pressure of rising input costs. It may be a little bit more pronounced in this, but I think that's where we're optimistic because we're in a unique place with this third package rollout that, to John's point, is going to help, help offset some of these rising input costs. So all in all, we're very, very optimistic about titanium and its ability to help continue to drive the top line longer term. And so the obvious follow-up is, when can we expect Mister Car Wash to generate margin expansion, and what has to happen in order for that to be the case? Boy, he's putting us on the spot, Jed. He wants an exact date. No hour, no minute.
Christian Carlino: That's okay. So, and I'm not trying to be cute here, Michael, when I say this, maximizing revenue is our first order of business. We are less focused on margin expansion right now as we make the right investments to deliver the type of experience that we expect to deliver. That said, we're very mindful of making sure that over time we have, you know, 30% net margins. Your favorite line, Michael. It's a beautiful thing, right, but we have a really nice margin profile today. But it's our collective goal to show some margin expansion incrementally over time. We hope to do that perhaps in the back half of this year, but, you know, right now we're focused more on the top line and driving adoption. Thank you very much and good luck.
The next question comes from Tristan Thomas-Martin with BMO Capital Markets. Please go ahead. Hey, good afternoon. I have a question around the competitive response of Titanium 360 and some of the relaunch of your introductory promos. Have they been responding by getting more aggressive on pricing, or do you think that's something that could happen? No, if anything, you know. We were, I'm not gonna say late to the dance, but most of our competitors have been offering three, if not four, membership programs already. And we had aired on the side early in our careers on the simplicity piece, where we had a two-tier program and had a in the good, better, best kind of mindset, having the best package out there to offer. If anything, we were late to the dance.
So we're launching, we've launched it. What we have seen from a competitive activity standpoint, and this is going back over the last couple of years, is that there are many folks out there that are getting very aggressive with their promotional strategies, but from a discounting their list prices standpoint, we really haven't seen that. Okay.
Thank you. And then maybe just kind of your general thoughts on the industry in 2020, 24 and 2025. I think you're talking about M&A, but I think you said it was abating in 24 and then dialing down in 25. So just maybe kind of curious what the difference is there.
Yeah, so it's, it's our view that, with respect to how hot this category of this sector has been over the last several years, that it was ripe for a correction, if you will, and a reset. And we started seeing the slowdown happening just this last year. And so, you know, pick a word, but we're using abate for 2024. With it, and when I say abate, it's a slowdown in the number of new units coming into the market. And 2025, you know, a little less new units than there were in 2024. So it's crushing, if you will.
And again, I think that that is healthy because there was a lot of stuff that was being built that perhaps shouldn't have been built. And, you know, those folks are having to run those operations for a long time. Awesome, thank you. The next question comes from Christian Carlino with JPMorgan, please go ahead. Hi, good afternoon.
Thanks for taking the time. Could you talk about how ticket and traffic grew in the quarter and how you're thinking about those components broadly in 2024? We're not going to give specifics, but we will say that our ticket average is up, and you're speaking specifically to our retail ticket. Is that right?
I think Christian, I think the business behaves just a little bit differently than a traditional retailer, where over 70% of our sales are subscriptions, and so really, we look at it two different ways. You've got revenue per member multiplied, obviously, by the number of members that you have in the program. That's what we collect as part of the subscription program, proven to be very resilient, consistent, and predictable. And then the retail side, which performs and looks a little bit more like a traditional retailer where you have an average ticket and number of transactions. We really haven't spoken or disclosed that at that level of detail. I think you can back into and get pretty close to the average revenue per member with the information that we've provided when you look at a mix of about 55% platinum members priced at roughly $29.99 and then 45% of our base members, which are priced at roughly $19.99.
So you can back into a rough revenue per member there. Got it. That's helpful. And, you know, under comments about the industry slowing unit growth this year, could you talk about how you're thinking about just market growth, market growth generally? And, you know, what you're thinking in terms of share gains for your guide? And would you expect share gains to sort of, you know, pick up relative to the past couple of years as a result of slower unit growth in the industry? Yeah, I'll start by saying it's a big market out there, and there's still a lot of growth potential. We have less than 5% of the market share, and as the industry leader, I put an asterisk next to that as a caveat by saying that while we're relatively large inside our industry, we're actually quite small.
And our upside growth potential, we feel, is tremendous. We've reset our vision for how many stores we believe are tangible and realistic and attainable, and that's 1,500 stores, not 1,000. And so, as we will have more than 500 stores in our portfolio this year, which is, for us, a really big milestone. But in a lot of ways, we're just getting started, and it feels very early.
Simeon Ari Gutman: Yeah, thank you very much. And again, if you have a question, please press star, then 1. Our next question comes from Simeon Gutman with Morgan Stanley. Please go ahead.
Hey, good afternoon. Hey John, the flowing, uh, expansion of the moderating expansion. Would it make sense to quantify how much the industry was seeing new units? supply growth over the last couple years. What that curve is moderating to in 24 and what it looks like in 25 and beyond, Yeah, and this is data that is hard to substantiate, but I'm talking to various OEMs and trying to triangulate around what we believe to be the total number of new units into the space in the U.S. It depends on who you talk to, but kind of around the 800 store range over the last two years, and again, we've seen that top out, and what that new rate of growth is going to look like in 2025 is really hard for me to predict, but we feel pretty confident that it's going to be less than what we saw in 2023 and 2024.
Okay, and one clarification on the question I think John asked earlier. When we're talking about opening in existing markets versus new markets, you said you have a lot of pipeline to go, and existing means if it doesn't make sense for you to go to new markets because of just the better returns of densifying, how long can you keep opening, call it, let's say 40 or 40 plus stores a year by sticking with existing markets? For 10 years. Yes, Simeon, when we talked about the 1,000 plus and we looked at the TAM, that was really looking at the growth within our existing markets. We don't plan to grow exclusively in our existing markets.
Over time, we'll start developing in adjoining markets, and I think as we look at the anticipated ramp of both, we expect good growth in both scenarios with the healthy cash-on-cash returns that we've seen here recently. If I can sneak one more in for you, Jed, the clarification. So the new guidance of the comp plus point five to two and a half. Did you suggest that there's no improvement beyond what retail is doing today, meaning getting to that number is the math of what's happening with titanium rolling into that number.
What we saw, no improvement from what we saw in Q4. OK. Got it. And that second part that I mentioned is no improvement in retail, but it's the conversion element that adds to that comp to get you there.
That's correct. That's great. Okay. I appreciate it. Okay. Great. Thanks, guys. Thank you. Thanks, operator. I'd like to conclude by saying as a pure play car wash company, our strategy is laser focused on growing our titanium member base, opening up new stores of strength, and building the best in class team while driving shareholder value. And at this moment, there's never been a more important time for us to live and breathe our culture, which is customer-centric to the soul. We're at a beautiful juncture in our growth trajectory where the challenges that others are facing will create opportunities for us to continue to scale and build a brand with enduring value. I look forward to checking back with you on our next quarterly call. Thank you, everyone, for joining us. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Simeon Gutman, Randal Konik, Justin Kleber, Simeon Siegel, Tristan Thomas, Elizabeth Suzuki, Peter Keith, John Heinbockel, Mister Car Was