Free Cash Flow DeclineA large drop in free cash flow erodes the company's ability to self-fund capex, pay sustained dividends, or build cash buffers. In project-heavy sectors, weak FCF can reflect longer receivable cycles or upfront working capital needs, increasing funding pressure over months.
Weak Cash ConversionLow conversion of profits into cash suggests earnings may be tied up in receivables or inventory. This reduces financial flexibility, magnifies the impact of payment delays, and makes the company more sensitive to working-capital swings common in construction and engineering.
Net Margin CompressionDeclining net margins indicate pressure from costs, pricing competition, or higher indirect expenses. Even with revenue growth, squeezed net margins limit retained earnings and return on projects, raising concerns about sustainability of profitability if cost or pricing trends persist.