Mister Car Wash, Inc. Fair Value Disclosure
10. Fair Value Measurements
The following table presents assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2025:
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|
Fair Value Measurements |
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|
Total |
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|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
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Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan |
|
$ |
7,464 |
|
|
$ |
7,464 |
|
|
$ |
— |
|
|
$ |
— |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan |
|
$ |
4,675 |
|
|
$ |
4,675 |
|
|
$ |
— |
|
|
$ |
— |
|
Interest rate swap |
|
$ |
234 |
|
|
$ |
— |
|
|
$ |
234 |
|
|
$ |
— |
|
Contingent consideration |
|
$ |
1,933 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,933 |
|
The following table presents financial assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2024:
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|
Fair Value Measurements |
|
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|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan |
|
$ |
6,487 |
|
|
$ |
6,487 |
|
|
$ |
— |
|
|
$ |
— |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan |
|
$ |
4,425 |
|
|
$ |
4,425 |
|
|
$ |
— |
|
|
$ |
— |
|
Contingent consideration |
|
$ |
4,328 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,328 |
|
We measure the fair value of our financial assets and liabilities using the highest level of inputs that are available as of the measurement date. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair value due to the immediate or short-term maturity of these financial instruments. See Note 11 Interest Rate Swap for additional information on the interest rate swap.
We maintain a deferred compensation plan for a select group of our highly compensated employees, in which certain of our executive officers participate in. The plan allows eligible participants to defer up to 90% of their base salary and/or incentive plan compensation as well as any refunds from our 401(k) Plan. Participants may elect investment funds selected by the Company in whole percentages. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds. These investment funds consist primarily of equity securities, such as common stock and mutual funds, and fixed income securities and are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. These investment options do not represent actual ownership of or ownership rights in the applicable funds; they serve the purpose of valuing the account and the corresponding obligation of the Company.
As of December 31, 2025 and 2024, the fair value of our First Lien Term Loan approximated its carrying value due to the debt's variable interest rate terms.
As of December 31, 2025 and 2024, we did not hold any cash investments.
As of December 31, 2025 and 2024, we recognized a Level 3 contingent consideration liability in connection with the Downtowner Car Wash acquisition. We measured its contingent consideration liability arising from our 2021 acquisition using Level 3 unobservable inputs. The contingent consideration liability is associated with the achievement of certain targets and is estimated at each balance sheet date by considering among other factors, results of completed periods and our most recent financial projection for future periods subject to earn-out payments. There are two components to the contingent consideration: a payment when we obtained the certificate of occupancy for the car wash and it opened to the public in 2023 and an ongoing annual payment based on the achievement of certain financial metrics of the business. A change in the forecasted revenue could result in a significantly lower or higher fair value measurement. We determined that there were no significant changes to the unobservable inputs that would have resulted in a change in fair value of this contingent consideration liability at December 31, 2025. During the year ended December 31, 2025, $2,396 payment was made. During the year ended December 31, 2024, a payment of $422 was made.
During the years ended December 31, 2025 and 2024, there were no transfers between fair value measurement levels.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 25, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.