Engineered Machinery Holdings Inc.

Overview Key strengths Key risks Sizable proportion of aftermarket revenue and long-standing customer relationships. High financial leverage due to acquisitive nature and financial-sponsor ownership. High barriers to entry given the highly engineered and customized nature of its products. Exposed to swings in the price of steel, which can affect its margins. Strong process automation tailwinds given current inflationary labor costs. Modest customer concentration. margins have been pressured, though we expect its aftermarket business and record backlog will boost its performance. Similar to other capital goods companies, Duravant has continued to face supply chain headwinds and increased costs for its materials and labor. However, we believe the company?s healthy aftermarket business, which carries higher margins and accounts for roughly 30% of

... margins have been pressured, though we expect its aftermarket business and record backlog will boost its performance. Similar to other capital goods companies, Duravant has continued to face supply chain headwinds and increased costs for its materials and labor. However, we believe the company's healthy aftermarket business, which carries higher margins and accounts for roughly 30% of its total sales, will likely help it offset the potential decline in its margins. Additionally, as of March 31, 2022, Duravant had a record backlog of more than $600 million, which provides it with good revenue visibility. Nevertheless, it has a limited ability to re-price its backlog, which could burden its margins if current inflationary headwinds do not subside....

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