Loan Covenant Compliance — Carvana FY2025

MacrosLM Finance Knowledge

LOAN COVENANTS / HIGH-YIELD CREDIT / CASE: CVNA

§ 03The financial ratios · how they're built

Three ratios do 80% of covenant work in a high-yield credit: secured leverage, interest coverage, and fixed-charge coverage. The definitions in the indenture are not the same as GAAP — every credit has its own "EBITDA add-back" treaty and pro-forma rules.

Carvana ratio build · FY25 ($M)

Component	FY25	FY24	FY23
Adjusted EBITDA
Operating profit	1,881	990	(80)
+ D&A	385	280	240
+ Stock-based comp	120	105	95
+ Restructuring / one-time	35	110	250
Adj. EBITDA	2,421	1,485	505
Debt build
Senior secured notes (1st lien)	5,280	5,520	5,820
Floor-plan facility	2,800	2,200	1,950
Total debt	10,720	10,150	9,820
(–) Cash & equivalents	(2,327)	(1,720)	(1,490)
Net debt	8,393	8,430	8,330
Ratio outputs
Secured net leverage	2.18×	3.18×	12.5×
Total net leverage	4.42×	5.85×	16.5×
Interest coverage	4.20×	2.20×	0.30×

The trajectory · why these matter

FY23: covenant-stressed. Interest coverage 0.30× would breach a 2.0× incurrence test if the company had tried to raise more debt; secured leverage at 12.5× sealed the door.

FY24: recovering. The exchange-note restructuring (PIK toggle, extended maturities) created breathing room. Adj. EBITDA recovery from $505M to $1.49B did most of the work.

FY25: operationally clear. All incurrence tests pass with material headroom. The secured-leverage test at 2.18× vs 2.50× cap is the tightest — any debt-funded acquisition or buyback would hit this first.

The covenant story tracks the operating story: Carvana is no longer at credit risk — but the lenders kept the leash on what management can do with the recovery.