Mister Car Wash Outlook Cut to Negative by S&P on Debt-Financed Dividend

S&P Global Ratings has revised its outlook on Mister Car Wash Holdings Inc. (NYSE: MCW) to negative from stable, citing concerns over increased leverage following the company's plan to issue new debt to fund a large dividend payment. The ratings agency affirmed its 'B' issuer credit rating on the car wash operator.

Debt-Fueled Dividend

The ratings action follows Mister Car Wash's proposal to issue a $2 billion senior secured first-lien term loan due in 2033. According to S&P, the proceeds are intended to refinance existing debt and to finance a $360 million dividend distribution to its financial sponsor, Leonard Green.

S&P assigned a 'B' issue-level rating and a '3' recovery rating to the proposed loan. The negative outlook reflects the credit risks associated with the transaction, which the agency noted will add approximately $300 million in additional debt to the company's balance sheet.

Weaker Credit Metrics Expected

The dividend recapitalization is expected to significantly weaken Mister Car Wash's key financial metrics. S&P provided the following estimates for the impact of the transaction:

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• Pro forma adjusted leverage is forecast to rise to approximately 6.8x, temporarily pushing it above the agency's downgrade threshold of 6.5x.
• Adjusted EBITDA interest coverage is expected to fall below 2.5x over the next 12 months.

S&P anticipates leverage will decline to about 6.5x by the end of 2026. However, the immediate increase in debt and weaker interest coverage are the primary drivers for the negative outlook.

Underlying Business Performance

Despite the credit concerns, S&P noted positive operational trends at the company. Mister Car Wash saw 12% growth in its Unlimited Wash Club membership in the first half of 2026, supported by low-single-digit comparable-store sales growth. The company's premium membership tiers now account for 60% of its subscription base.

S&P forecasts the company will open 20-25 new stores annually and generate modestly positive free operating cash flow of around $28 million in 2027. Pro forma for the transaction, Mister Car Wash is expected to have about $23 million in cash and nearly full availability under its $375 million revolving credit facility.