Weak Cash GenerationA sharp drop in operating and free cash flow signals deteriorating cash conversion of earnings. Over the medium term this weakens funding for capex, working capital and distributions, increases reliance on external financing if growth continues, and raises execution risk on new contracts.
Low Absolute Net MarginAlthough margins are improving, a single-digit net margin leaves limited buffer against cost inflation, project overruns or competitive pricing. Low absolute profitability constrains internal reinvestment capacity and magnifies the impact of any adverse industry events on sustainable earnings.
Limited Leverage Capacity For GrowthVery low debt provides stability but also limits near-term growth optionality if management prefers not to increase leverage. Without tapping debt or equity, the firm may need to slow expansion or rely on slower organic funding, potentially ceding market share to more aggressively financed peers.