IN THIS ISSUE CAR WASH INSIGHT Recent, Notable M&A Transactions .
INVESTMENT BANKING CAR WASH INSIGHT MERGERS & ACQUISITIONS, PUBLIC & PRIVATE CAPITAL AND FINANCIAL ADVISORY SERVICES FOR INSTITUTIONAL USE ONLY SPRING 2023 IN THIS ISSUE Recent, Notable M&A and Capital Market Highlights Acquisition Spotlight Macroeconomic Indicators What We’re Reading 1
CAR WASH INSIGHT CAR WASH INSIGHT SPRING 2023 Recent, notable M&A and capital market highlights Announced: 12/22/2022 Alimentation Couche-Tard acquires True Blue Car Wash Alimentation Couche-Tard operates over 14,000 convenience stores in more than 20 countries True Blue is an express car wash platform with 65 sites throughout the Southwest and Midwest; it was previously a portfolio company of ROCA Partners Announced: 1/11/2023 Magnolia Wash Holdings acquires Blue Water Car Wash Magnolia Wash Holdings operates more than 100 sites across the U.S. Blue Water Car Wash operates four sites in Alabama and Florida WhiteWater Express acquires Classic Auto Spa and Bubble King Car Wash WhiteWater Express has more than 100 operational and developmental sites in the Southeast and Midwest Classic Auto Spa operates three sites in Louisiana; Bubble King Car Wash operates one site in Eastern Texas El Car Wash acquires Bill’s Car Wash and Smart Car Wash Source: Public company filings, press releases, and CapitalIQ. Announced: 1/26/2023 & 4/5/2023 El Car Wash expands its Southern Florida footprint which now includes over 30 locations Bill’s Car Wash operates 3 sites in Brevard County; Smart Car Wash operates two sites near West Palm Beach and northern Miami Spotless Brands raises 600 million in growth capital from Access Holdings and Wafra Announced: 11/22/2022 & 3/16/2023 Announced: 3/16/2023 Spotless Brands will utilize the proceeds to fuel growth via new builds and M&A Access Holdings is a Baltimore-based investment firm focused on business and consumer services Wafra is an investment firm with 31 billion AUM; Wafra previously owned El Car Wash before selling to Warburg Pincus 2
SPRING 2023 CAR WASH INSIGHT Recent, notable M&A activity Monthly activity levels y/y Date Acquiror Target States Sites acquired 4/14/2023 Ace Auto Washes Mechigan Auto Washes MI 3 4/5/2023 El Car Wash Smart Car Wash FL 2 3/31/2023 Club Car Wash Undisclosed AR 4 15 3/29/2023 Tsunami Express Pride's Express Car Wash IN 3 10 3/16/2023 WhiteWater Express Bubble King Car Wash TX 1 3/10/2023 Rocket Carwash Shine Shop Car Wash IA 4 2/22/2023 Flagstop Car Wash Hogwash Express Car Wash VA 1 2/21/2023 Splash Car Wash Knockout Car Wash NY 1 2/21/2023 Performance Plus Sparkle Car Care Centers MI 3 1/31/2023 Go Car Wash Moreno Valley Express Car Wash CA 1 1/27/2023 Jax Kar Wash Howell Soft Cloth Car Wash MI 1 1/26/2023 El Car Wash Bill's Car Wash FL 3 100 1/11/2023 Magnolia Wash Holdings Blue Water Express Wash FL 4 12/28/2022 Mister Car Wash Rapid Express Carwash CA 3 80 12/28/2022 Spotless Brands Let's Go Car Wash OK 4 12/28/2022 Spotless Brands Auto Spa Express TN 1 40 True Blue Car Wash AZ, IL 65 20 0 12/22/2022 Alimentation Couche-Tard 12/21/2022 Mint Eco Car Wash Undisclosed FL 1 12/15/2022 LUV Car Wash The Auto Wash Group PA 8 Undisclosed NV 12 Classic Auto Spa LA 3 12/5/2022 Tommy's Express Car Wash 11/22/2022 WhiteWater Express Source: Public company filings, press releases, and CapitalIQ. 20 5 0 # of Deals Alimentation Couche-Tard acquires True Blue Car Wash (65 sites) 60 # of Sites 3
CAR WASH INSIGHT SPRING 2023 Acquisition spotlight: Alimentation Couche-Tard announces acquisition of True Blue Car Wash On December 22, 2022, Alimentation Couche-Tard entered into a binding agreement to acquire all interests of True Blue Car Wash LLC, a portfolio company of ROCA Partners True Blue currently operates 65 car washes in Arizona, Texas, Illinois and Indiana under its Clean Freak and Rainstorm brands, and has a strong pipeline of new-to-industry sites planned or under development True Blue has approximately 170,000 fast-pass subscription members, which accounts for more than half of total revenue; the Company has seen 45% growth in the number total cars washed since 2018 More than 85% of True Blue’s locations are within 3 miles of a Circle K location, creating significant geographical density to promote cross-selling and increase customer engagement In April 2023, Alimentation Couche-Tard also announced the acquisition of 44 Big Red convenience stores, which included 17 car washes in Arkansas; Raymond James served as the sole financial advisor to Big Red Source: Public company filings, press releases, and CapitalIQ. 4
SPRING 2023 CAR WASH INSIGHT Select private equity involvement Financial sponsor Investment (now public) Year acquired Total sites Geography 2014 439 Nationwide 2020 277 Nationwide 2018 205 13 states 2015 192 5 states 2020 2018 157 7 states 156 Southeast, Midwest 2019 127 7 states 2018 115 18 states 2020 104 6 states 2020 104 7 states Source: Company websites and press releases, as of 5/4/23. Financial sponsor TRP Capital Partners Investment Year acquired Total sites Geography 2021 72 AZ, CA, CO, TX 2021 71 CA, FL, GA, NV 2018 55 5 states 2022 36 FL 2021 36 Southeast 2022 22 IN, MI, WI 2022 15 PA 2022 14 NY, TX 2022 6 KY 5
SPRING 2023 CAR WASH INSIGHT Public equity metrics: Driven Brands and Mister Car Wash Public trading performance since IPO Public trading performance since IPO 60.0% 27.7% 5/10/23 40.0% 20.0% IPO price 0.0% -20.0% (40.6%) 5/10/23 -40.0% -60.0% Jan-21 May-21 Jan-21 Feb-22 Jan-22 May-22 Sep-22 Mister Sep-21 Drvn Jan-23 Apr-23 16.8x NYSE: MCW Current share price 28.10 8.91 Current vs. IPO 27.7% (40.6%) 22.26 - 34.50 8.18 - 23.53 Total enterprise value ( B) 8.8 4.3 Market capitalization ( B) 4.7 2.8 Avg daily volume (millions) 0.5 1.4 37.1% 27.0% Post-IPO trading range Float % P/E ratio TEV/EBITDA 20 NASDAQ: DRVN 17.7x 14.1x 15 15.3x 12.3x 13.9x DRVN 10 MCW 5 0 2022 2023E Sources: Estimates per Capital IQ, market data as of 5/10/2023. 2024E 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 30.0x 27.9x 25.6x 22.1x 23.7x 18.1x DRVN MCW 2022 2023E 2024E 6
SPRING 2023 CAR WASH INSIGHT Earnings summary: Driven Brands and Mister Car Wash ( in millions except per share data) 1Q2023 results(1) Consensus(2) Net revenues y/y growth 20.1% 19.3% Comparable car wash sales growth (11.3%) Car wash y/y EBITDA growth 1Q2023 results(1) Consensus(2) Net revenues y/y growth 3.0% 4.8% n/a Comparable store sales growth (1.6%) n/a (20.5%) n/a UWC membership y/y growth 12.6% n/a 1,116 n/a Total car wash locations 439 n/a 5 n/a Net new locations q/q 3 n/a Net revenues 562.5 558.7 Net revenues 225.0 230.0 Adjusted EBITDA 127.8 126.6 Adjusted EBITDA 71.0 73.0 EPS (GAAP) 0.17 0.19 EPS (GAAP) 0.06 0.08 1-day stock price reaction (5/3/23) 3.5% Total car wash locations Net new car wash locations q/q 1-day stock price reaction (5/4/23) (3.47%) Select commentary: “We continue to experience softer retail volume as a result of the macro environment. We had modestly less pressure from foreign exchange rate movement, and we will begin to lap that FX rate pressure in Q2 '23. The long-term opportunity within the Car Wash business remains compelling with strong profitability, cash on cash returns and cash flow generation over time. Our scale and experience will remain a significant competitive advantage as the current environment is beginning to rationalize the competitive intensity of new entrants. the Car Wash category remained resilient relative to the broader retail industry. As we migrate our footprint under the Take 5 Brand, which was largely 2/3 complete as of the end of Q1, we are elevating our brand awareness, standardizing our market positioning, our operations, systems and customer experience. This, in turn, allows us to integrate our Take 5 Unlimited program and enhance our data capture capabilities.” (Jonathan Fitzpatrick, DRVN CEO). Sources: (1) Company public filings; DrivenBrands.com and MisterCarWash.com. (2) Equity research consensus estimates per CapitalIQ and industry research reports. Select commentary: “Last year's first quarter benefited from a strong macro backdrop, favorable weather conditions and lower store labor costs. The trends heading into this year's first quarter were obviously very different, and we knew that growing the top and bottom line was going to be difficult. Embedded in the full year guidance that we previously provided was the assumption that first half comparable store sales could be flat to plus or minus or a point or two, while the headwinds from weather did impact the first quarter more than expected, our results were still within the range of expectations.” (Jedidiah Gold, MCW CFO). 7
SPRING 2023 CAR WASH INSIGHT Sale leaseback market conditions REIT dividend yields (last twelve months)(1) 8.0% 5.11% 6.0% 5.09% 4.0% 5.04% 2.0% Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Tenant International Car Wash 40 Jan-23 Feb-23 Mar-23 Apr-23 May-23 4Q22 average cap rates by industry(2) Select operator sale leaseback terms(2) # on market Dec-22 8.0% Avg. Cap 5.35% Avg. Term 18.7 years Avg. Price 10 Year Cap 4,115,990 5.35% 6.0% 5.8% 5.7% 5.6% 5.6% 5.2% 5.3% 5.1% 4.9% 4.8% Bank Car wash Auto parts C-stores QSR 4.0% Mammoth Car Wash 25 5.40% 19.8 years 4,754,078 5.40% Tidal Wave Auto Spa 36 5.50% 20.0 years 5,964,038 5.50% Sources: (1) Per Capital IQ, market data as of 5/12/2023. (2) B E Real Estate Q4 2022 Net Lease Cap Rate Report. 2.0% 0.0% Dollar store Big box Pharmacy Casual dining 8
SPRING 2023 CAR WASH INSIGHT Macroeconomic indicators Real GDP growth Unemployment rate (seasonally adjusted annual rates) 35.3% 40.0% 20.0% 0.0% (20.0%) 20.0 3.9% 6.3% 7.0% 2.7% 7.0% 3.2% 2.6% 1.1% (1.6%) (0.6%) (4.6%) 10.0 (29.9%) (40.0%) Q1 '20 Q2 '20 15.0 5.0 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 0.0 Apr-19 3.4% Oct-19 43.0% 20.0% (20.0%) 10.8% 12.1% 3.0% 3.1% 1.3% 2.0% 2.3% 1.0% 3.7% Apr-22 Oct-22 Q2 '20 Apr-23 5.0% 6.0% 4.0% 3.4% 2.0% (32.1%) Q1 '20 Oct-21 8.0% (6.2%) (40.0%) Apr-21 10.0% 3.9% 0.0% Oct-20 Inflation vs. 10-Year Treasury Consumer spending growth (real PCE % change, seasonally adjusted at annual rates) 40.0% Apr-20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1' 22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 0.0% Apr-16 Sources: Bureau of Economic Analysis, St. Louis Federal Reserve, Bureau of Labor Statistics, Institute for Supply Management and Capital IQ. All data as of 5/11/2023. Apr-17 Apr-18 Inflation (CPI) Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 10-Year U.S. Treasury Yield 9
SPRING 2023 CAR WASH INSIGHT Debt market: volume and use of proceeds Quarterly Origination Volume Quarterly Volume by Proceeds 70 47.4 50 38.0 40 14% 90% 57.8 60 80% 12% 70% 5% 7% 22% 27.9 19.7 1% 10% 17% 5% 10% 3% 8% 3% 28% 38% 48% 20% 10 12% 12% 37% 60% 30% 0% 33% 40% 19.4 0% 7% 0% 34% 38% 31% 50% 18.3 9% 2% 5% 7% 60% 39.4 30 20 2% 100% 35% 38% 44% 55% 65% 44% 10% 0% 0 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 2Q21 1Q23 3Q21 LBOs In line with declining global M&A volume, 1Q23 private debt volume declined 30% q/q to 19.4 billion, following a 29% q/q decline in 4Q22 Despite this, private debt is expected to continue to take market share throughout 2023, as broadly syndicated and high-yield markets remain fragile Source: Direct Lending Deals (calculated based on rolling 90 days data). Data through March 2023. Add-On M&A 1Q22 Dividend 2Q22 3Q22 Refinancing 4Q22 1Q23 Other Including all add-on deals, M&A accounted for 77% of private debt volume and the remainder comprised refinancings and dividend recaps ‒ 4Q21 In the syndicated loan market, M&A accounted for only 20% of volume There was a meaningful increase in dividend activity in 1Q23, up to 12% from 0% in the prior quarter 10
SPRING 2023 CAR WASH INSIGHT Average leverage multiples LBO Leverage 7.0x 6.0x 5.0x 4.0x 7.0x 6.4x 6.0x 5.9x 4.4x 6.1x 6.0x 5.9x 5.6x 5.6x 5.4x 5.3x 5.2x 5.3x 6.0x 6.0x 5.3x 5.9x 5.3x 6.2x 6.2x 6.0x 5.9x 5.7x 5.7x 5.5x 5.5x 6.1x 5.7x 5.3x 5.2x 5.7x 5.4x 5.9x 5.6x 5.3x 5.2x 5.1x5.2x 5.0x 4.2x 4.0x 4.0x 4.2x 4.2x 4.2x 4.2x 3.9x 3.8x 3.9x 3.9x 4.0x 3.0x 3.0x 2.0x 2.0x 1.0x 1.0x 0.0x 0.0x Senior Unitranche Leverage 20M vs. 20M EBITDA Unitranche Unitranche and senior debt multiples for LBO transactions remain depressed in 1Q23 vs. the prior quarters amidst lower risk appetite from lenders and higher debt service from the spike in interest rates Source: Direct Lending Deals (calculated based on rolling 90 days data). Data through March 2023. 20M 20M Unitranche leverage multiples increased in 1Q23, especially for borrowers with greater than 20 million of EBITDA ‒ The primary catalyst for the increase was the reappearance of repeat borrowers who had previously engaged in more ambitious transactions in 2021 or prior, seeking additional funding in the market 11
Spring 2023 What we’re reading “Consumers’ behaviours, technological preferences and expectations continue to evolve ” PWC “A monthly update on the state of the US consumer” McKinsey & Co. February 16, 2023 – Concerned about inflation and the cloudy macroeconomic climate, consumers are realigning their shopping habits and adopting cost-cutting behaviours. Fully half of all consumers are either very or extremely concerned about their own personal financial situation. And 96% of surveyed consumers intend to adopt some type of cost-saving behaviour over the next six months. Still, eager to resume their pre-covid habits, they’re returning to stores and travelling again. Empowered by technology, they’re seeking and demanding seamless in-store and online experiences that better suit their lifestyles—and pocketbooks. April 25, 2023 – Heading into the summer season, consumer sentiment isn’t quite sunny. True, there’s been an uptick in optimism: one-third of consumers, compared with only one-fourth in June 2022, believe the economy will rebound in just two to three months. Still, more than one in five consumers are expecting darker days ahead: 22 percent are predicting a US recession and long-term economic pain. And nearly half of survey respondents report having a “mixed” outlook: they expect the economy to recover but not for another six to 12 months. These numbers are less favorable than they were throughout 2020. Read More Read More “Sale-leasebacks offer a cure for a Tough Market in 2023” Erik Sherman, Globest “Customer subscriptions: from transactions to relationships” Carwash.com May 9, 2023 – The strategy is a cross between a real property sale and a corporate financing arrangement but is completed at cap rates that are well below corporate lending rates. A company can unlock property assets on their balance sheet and generate cash to invest into their business for anything, including new product development, expansions, or any other initiative to grow revenue and profits. Because the arrangements are long-term, a company maintains access to their critical facilities. Additionally, all the lease payments are considered operating expenses, providing tax advantages for lessees. Read More May 11 , 2023 – Subscriptions can strengthen relationships with customers and reduce a dependence on cash transactions. With a critical mass of subscriptions, owner/operators have a more dependable income. They have the confidence to reinvest in the business, which can improve facilities and wash quality, lead to more services and special offers, and ultimately enhance the customer experience and the customer and owner relationship. Subscription models offer a win-win for all parties. Read More Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. 12
Your success is our business SCOTT GARFINKEL Learn how our deep industry expertise and commitment to each transaction can help you achieve your business objectives here. Deep and experienced team Senior Managing Director & Group Head Nashville Office 615.645.6796 scott.garfinkel@raymondjames.com 8 investment bankers ROGER WOODMAN 4 Managing Director Atlanta Office 404.240.6864 roger.woodman@raymondjames.com JOHN VEITH Director Nashville Office 615.645.6799 john.veith@raymondjames.com This material is not to be considered an offer or solicitation regarding the sale of any security. This material was prepared within Raymond James & Associates’ Investment Banking Department and is for information purposes only. This material is not a product of Raymond James & Associates’ Research Department; recipients of this report should not interpret the information herein as sufficient grounds for an investment decision or any other decision. The report shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities mentioned herein; past performance does not guarantee future results. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. 4 equity research analysts dedicated equity capital markets pros Robust transaction experience(1) 80 relevant industry transactions 25 13B total deal value years focused on the industry Raymond James & Associates, Inc., member of New York Stock Exchange / SIPC Client focus Car Wash Operators Truck Stop & Travel Center Operators Convenience Retail Merchandise/ Foodservice Distributors Representative transactions Has sold select convenience store assets to Has sold assets to April 2023 Commercial Fuel & Lube Distributors Propane & Heating Oil Marketers Terminal Operators Mobile Refueling Alternative Fuel Providers Oil Jobbers / Wholesale Fuel Distributors March 2022 Has completed its Has sold its convenience store assets to business combination with March 2021 December 2020 Has been acquired by July 2020 Oklahoma Has been acquired by March 2020 13 (1) Current as of May 2023.
9/8/2022 Club Car Wash Sites of Tidal Wave Express Car Wash 8 8/29/2022 Take 5 Car Wash Soft Touch Car Wash, Auto Oasis Car Wash, Clearwater Car Wash and Birdie's Car Wash 5 8/25/2022 WhiteWater Express Geaux Clean Car Wash 7 8/19/2022 ModWash Home Team Car Wash 3 8/18/2022 Splash In ECO Car Wash (Wills Group) Blue Hen Car Wash 2
teachers talked individually with children about their car wash stories. The teachers wrote down each car wash story and later typed the stories on the computer. For example, Joseph (4 years, 7 months) dictated a story about a visit to a car wash: "My Mommy took me to a car wash. She didn't crash into the car wash. The worker washed our car.
DetailXperts Car Wash has some competition relatively close to the chosen location. The closest of is that of _ within a quarter mile. Competition is limited to outdated tunnel or friction car washes and lube and wash. DetailXperts Car wash boasts of the first eco-friendly car wash system in the area. Competitive Analysis Table
Trends in the Car Wash Business Automatic Car Washing Since 2011 there has been a slow but steady growth in automatic car wash services. The major advantage of the automatic car wash is speed. Within 15 minutes or so the body of the car is washed and clean. The services have not gone gained mass traction yet, though they are
Car Wash Defined A car wash is a facility for cleaning the exterior and sometimes the interior of cars. There are many different types of car wash service facilities, including: Self-serve bays: Single stall drive-in bay with wands and hoses for hands-on customer use. Options are operated on the wand, and include presoak, wash, double soap, pre .
Queueing Theory-12 Car Wash Example Consider the following 3 car washes Suppose cars arrive according to a Poisson input process and service follows an exponential distribution Fill in the following table What conclusions can you draw from your results? ! µ! L L q W W q P 0 Car Wash A 0.1 car/min 0.5 car/min Car Wash B 0.1 car/min
Today's car wash business models are labor friendly! There are significant tax incentives for car wash operators! Car washing is a 15 billion dollar a year industry, growing at 2.5% annually! Car washes are highly profitable businesses with many opportunities for future development! Car washing is a natural complement to many types of .
Today's car wash business models are labor friendly! There are significant tax incentives for car wash operators! Car Washing is a 15 billion dollar a year industry, growing at 2.5% annually! Car Washing is a highly profitable business with many opportunities for future development! Car Washing is a natural complement to many types of .
Schiavo ex rel. Schiavo, _ F.3d _, 2005 WL 648897 (11th Cir. Mar. 23, 2005) (Schiavo I), stay denied, _ S. Ct. _, 2005 WL 672685 (Mar. 24, 2005). After that appeal was taken, the plaintiffs filed an amended complaint on March 22, 2005, adding four more counts, and a second amended complaint on March 24, 2005, adding a fifth count. On the basis of the claims contained in those new .
