Volatile Operating And Free Cash FlowInconsistent operating and free cash flow undermine the company’s ability to fund capex, pay down debt, or cushion downturns. Persistent volatility raises the need for external financing and limits the durability of margin improvements, constraining strategic flexibility over the medium term.
Low Net Profit MarginsLow net margins despite revenue and gross-margin gains indicate structural cost or SG&A pressure. If operating expenses remain elevated, retained earnings and cash conversion will lag, restricting the company’s ability to build reserves or invest in productivity-enhancing projects.
Exposure To Cyclical OEM Demand And Raw MaterialsAs a B2B supplier of forged components, the business is structurally tied to OEM order cycles and commodity input swings. This cyclicality and input-price exposure can cause durable revenue and margin variability, complicating forecasting and capital planning across 2–6 month horizons.