Katapult Holdings, Inc. (NASDAQ:KPLT), a specialty leasing company, has increased its credit facility from $75 million to $100 million, according to a recent 8-K filing with the Securities and Exchange Commission. On Monday, the company reported that it had amended its Credit Agreement for the 17th time, enhancing its financial flexibility.
The amendment, effective November 21, 2024, includes a $15 million increase in revolving lending commitments and the addition of a $10 million uncommitted line of credit. The latter is available only when the committed portion of the revolving credit facility is fully utilized.
This move comes apart from the non-binding letter of intent Katapult disclosed in its third-quarter earnings release, which pertains to securing a new revolving line of credit, working capital line, and term loan.
In conjunction with the credit facility expansion, the lenders have agreed to waive the original issue discount that would typically be payable under the Credit Agreement due to the increase. This waiver will likely provide Katapult with more immediate access to the additional funds without the upfront cost that typically accompanies such credit expansions.
The company, headquartered in Plano, Texas, operates under the equipment rental and leasing industry. The additional financial resources from the credit facility are expected to support Katapult's operational and strategic initiatives as it continues to navigate the competitive landscape.
The detailed terms of the Seventeenth Amendment to the Loan and Security Agreement are included as Exhibit 10.1 in the 8-K filing. This filing provides investors and the public with the official documentation of the agreement and its specifics.
Katapult's expansion of its credit facility reflects its efforts to strengthen its financial position and support its growth strategies. The information is based on the company's recent SEC filing.
In other recent news, Katapult Holdings disclosed its third-quarter earnings, marking an eighth consecutive quarter of growth in gross originations. The company's gross originations for Q3 2024 were $51.2 million, a 3.3% increase, and revenue grew by 10% to $60.3 million.
Adjusted EBITDA was positive at $600,000, with a year-to-date total of $5.8 million. The full-year outlook for gross originations is adjusted to a growth of 2% to 4%, with revenue expected to grow at least 10%.
Loop Capital adjusted its outlook on Katapult Holdings, decreasing the price target to $9.00 from the previous $15.00, while maintaining a Hold rating. The revision follows Katapult's third-quarter performance, which did not meet expectations. The firm also expressed concerns over the trajectory of Katapult's business growth and skepticism regarding the company's earlier forecasts.
Among other recent developments, Katapult Holdings is finalizing a new credit facility to replace the current one and has recorded a reserve for a DCA settlement. The company is also addressing a patent infringement lawsuit, intending to defend itself vigorously.
Despite a significant decline in application volume from Wayfair (NYSE:W), the company has shown strong growth in the automotive category, increasing over 25% in Q3.
InvestingPro Insights
Katapult Holdings' recent credit facility expansion aligns with its current financial situation, as revealed by InvestingPro data. The company's market cap stands at $30.65 million, with a revenue of $241.79 million for the last twelve months as of Q3 2024, showing a 14.99% growth. This growth trend is further supported by a 10.03% quarterly revenue increase in Q3 2024.
However, InvestingPro Tips highlight some challenges. The company is "quickly burning through cash" and has "short-term obligations exceeding liquid assets," which may explain the need for an expanded credit facility. Additionally, the stock "generally trades with high price volatility," which investors should consider.
Despite these challenges, Katapult has shown a "significant return over the last week," with a 12.04% price increase. This recent positive momentum could be linked to the announcement of the credit facility expansion.
For a more comprehensive analysis, InvestingPro offers 12 additional tips for Katapult Holdings, providing deeper insights into the company's financial health and market position.
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