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. Throughout 2023, bookings sequentially declined as elevated interest rates delayed customer purchasing decisions. Notably, Duravant faced headwinds in both its protein and material handling businesses. In protein, oversupply, weak pricing, and higher input costs caused customers to delay their automation projects. In material handling, some of Duravant's largest blue-chip customers pulled back on spending due to overbuilt

...We expect sales to improve in the second half of 2024. Throughout 2023, bookings sequentially declined as elevated interest rates delayed customer purchasing decisions. Notably, Duravant faced headwinds in both its protein and material handling businesses. In protein, oversupply, weak pricing, and higher input costs caused customers to delay their automation projects. In material handling, some of Duravant's largest blue-chip customers pulled back on spending due to overbuilt capacity. However, that trend reversed in the first half of 2024 as bookings have materially improved to the highest levels in more than two years, which we anticipate will translate into solid revenue in...

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