El Segundo, CA-based toymaker Mattel Inc . (NASDAQ:MAT) has entered into a new $1.4 billion senior unsecured revolving credit facility, according to a recent SEC filing. The agreement, effective as of Monday, replaces a previous credit line established in September 2022.
Under the new credit agreement, which matures on July 15, 2029, the company can choose from floating interest rates tied to Term SOFR or the Base Rate, with margins that vary based on Mattel's debt rating. The new facility also includes customary fees such as an unused line fee and a letter of credit fronting fee.
Mattel is allowed to prepay loans under this facility at any time without incurring penalties. The agreement imposes customary covenants that limit the company's ability to engage in certain activities such as mergers, asset sales, incurring additional debt, and granting liens, subject to standard exceptions.
Additionally, the agreement mandates that Mattel maintains an interest coverage ratio of at least 2.75 to 1.00 and a total leverage ratio that does not exceed set limits, with some flexibility for material acquisitions.
The filing also disclosed that Mattel's obligations under the new credit facility may be guaranteed by certain subsidiaries, if they guarantee other indebtedness of the company exceeding $50 million.
Mattel's relationship with the lenders and financial institutions involved in the credit agreement includes various banking arrangements through which the lenders receive customary fees and expenses.
The information provided in this article is based on a press release statement.
In other recent news, Mattel Inc. has been making strategic moves to strengthen its position in the market. The company announced a multi-year partnership with Outright Games, a leading publisher of family-friendly interactive entertainment.
This collaboration involves the launch of three new console and PC games, promising a variety of experiences for a global audience. These developments align with Mattel's strategy to enhance its digital presence in the gaming sector, a move that has already seen the company reach 48 million monthly active players.
Financially, Mattel has been performing well, with BofA Securities raising their price target for the company's shares due to significant gross margin growth. Mattel reported an adjusted EPS loss of $0.05 for the first quarter, outperforming BofA Securities' estimate of a $0.12 loss. This performance was largely driven by a gross margin increase of 48.3%, exceeding the forecasted 44.0%.
Moreover, Mattel released its financial results for the first quarter of 2024. Despite a slight dip in net sales by 1% from the previous year, the company noted substantial expansion in gross margins and a boost in adjusted EBITDA. Mattel's key brands like Barbie and Hot Wheels continue to perform well, and the company remains optimistic about its market share growth and full-year financial targets.
InvestingPro Insights
As Mattel Inc. (NASDAQ:MAT) secures its financial flexibility with a new $1.4 billion senior unsecured revolving credit facility, investors may be interested in key financial metrics and expert insights that could impact the company's stock performance.
According to InvestingPro data, Mattel boasts a market capitalization of $5.86 billion and a Price/Earnings (P/E) ratio of 20.37, which adjusts to 19.28 on a last twelve months basis as of Q1 2024. The company's revenue growth over the last twelve months stood at 4.38%, signaling a steady financial trajectory.
InvestingPro Tips highlight that Mattel has received a perfect Piotroski Score of 9, indicating strong financial health. Furthermore, the company's liquid assets exceed its short-term obligations, providing it with a solid liquidity position.
Analysts have also predicted that Mattel will be profitable this year, which aligns with the company's positive net income growth expectations. However, investors should note that 7 analysts have revised their earnings predictions downwards for the upcoming period, and the stock is trading at a high P/E ratio relative to near-term earnings growth.
For investors seeking further analysis and additional InvestingPro Tips, visit https://www.investing.com/pro/MAT. There are more tips available, including insights on debt levels, trading positions, and dividend policies. To access these valuable resources, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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