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. We continue to believe the rising cost for labor will likely push companies to automate their processes over the long term and believe Duravant is well positioned to capitalize on the expected increase in capital spending. However, as we go further into a higher-for-longer interest rate environment, customers could elect to push off their spending on larger

...Engineered Machinery Holdings Inc. (Duravant) may face near-term headwinds, but long-term demand trends remain strong. We continue to believe the rising cost for labor will likely push companies to automate their processes over the long term and believe Duravant is well positioned to capitalize on the expected increase in capital spending. However, as we go further into a higher-for-longer interest rate environment, customers could elect to push off their spending on larger projects. Nonetheless, we expect Duravant's larger blue-chip customers, who are less affected by higher rates, to continue spending on automation to ensure...

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