Rising LeverageIncreasing debt levels reduce financial flexibility and raise interest and covenant risk, limiting the company's ability to invest in new facilities or absorb demand shocks. In a capital-intensive service business, higher leverage makes funding future expansion or R&D more costly and riskier.
Negative Free Cash Flow TrendPersistent negative free cash flow requires either higher borrowing or equity funding to sustain growth and capex. Over the medium term this can pressure balance sheet strength, constrain discretionary investments, and amplify the impact of rising leverage on credit metrics and strategic flexibility.
Declining Net And Operating MarginsWorsening net and slight EBIT margin declines signal pressure on operational efficiency or higher SG&A/costs. Combined with EPS contraction noted in fundamentals (EPS growth negative), this reduces retained earnings and the firm’s ability to self-fund growth, weakening resilience over the next several quarters.