Rising LeverageA rising debt-to-equity profile increases fixed obligations and reduces financial flexibility. Higher leverage can amplify earnings volatility, constrain the company's ability to invest in inventory or logistics, and increase refinancing risk if market conditions shift over the coming months.
Declining Free Cash Flow GrowthWeakening free cash flow growth and volatile operating cash conversion indicate inconsistent cash generation. That variability can hinder the firm's ability to pay down debt, fund working capital needs, or invest in logistics improvements, making the business more sensitive to cyclical downturns.
Pressure On Operating MarginsA declining EBIT margin signals pressure on operating efficiency or rising selling/overhead costs. In a low-margin distribution business, sustained margin compression reduces the cushion for cost shocks and limits free cash flow, forcing tougher trade-offs between pricing, service levels, and cost controls.