CarMax Inc (0HTQ.L) Q3 2025 Earnings Report

CarMax Inc reported QQ3 2025 revenue of USD 6.223B, up 1.22% year-over-year but down 11.27% quarter-over-quarter. Gross profit reached USD 677.646M for a gross margin of 10.89%, while operating income was a negative USD 58.561M, yielding an operating margin of -0.94%. The company posted net income of USD 125.441M and basic/diluted EPS of USD 0.80/0.81, aided by a sizable non-operating income line (total other income/expenses net) of USD 225.033M that offset operating weakness. EBITDA stood at USD 460.458M (EBITDA margin ~7.40%), but true operating profitability remains challenged by elevated selling, general, and administrative costs and reconditioning/flow through costs typical of a large used-vehicle retail platform.

From a cash-flow perspective, operating cash flow was negative USD 23.352M and free cash flow was notably negative at USD -150.551M, with capex of USD -127.199M, highlighting ongoing capital discipline needs and working capital dynamics. Net debt remains sizable at roughly USD 17.35B (long-term debt USD 17.041B; cash and cash equivalents USD 271.9M; total debt to capitalization ~75.8%). The balance sheet shows robust current liquidity (current ratio ~2.30) but structural leverage remains a key overhang for near-term profitability and financial flexibility.

In the context of peers and industry benchmarks, CarMax appears to be operating with comparatively thinner margins and higher leverage than several European and U.S. peers in the consumer cyclicals space, raising questions about leverage risk and longer runway to deleverage. The absence of a stated forward guidance in the provided data necessitates a cautious stance until management outlines explicit levers for margin expansion and deleveraging.