High And Rising LeverageElevated and increasing debt relative to stagnant equity constrains financial flexibility and raises refinancing and interest-rate vulnerability. High leverage limits room for strategic investments or buffering future profit shocks, making the business structurally more sensitive to downturns and funding stress.
Volatile ProfitabilityLarge swings from loss to profit and back to near breakeven indicate earnings are highly sensitive to cost cycles, pricing, or mix. Such volatility undermines long-term planning, impedes consistent reinvestment and reserve-building, and increases execution risk for margin recovery initiatives.
Inconsistent Free Cash FlowIrregular conversion of earnings into free cash flow—including multi-year negative FCF periods—reduces capacity to deleverage, fund capex, pay dividends, or pursue M&A without external capital. This structural inconsistency heightens reliance on debt markets and raises long-term funding risk.