Rising LeverageMaterial increase in leverage (D/E ~1.28 TTM) reduces financial flexibility and raises refinancing and interest risks. If earnings or cash flow weaken, higher debt amplifies downside, may constrain capital allocation, and forces prioritization of debt service over growth investments.
Margin Pressure — Michigan Tax & PricingA structural 24% excise tax in Michigan plus ongoing pricing pressure in mature markets compresses realized ASPs and operating margins. Even when excise is invoiced, competitive negotiations erode underlying prices, posing a sustained threat to margin sustainability and cash generation.
Volatile Profitability & Negative Free Cash FlowAlthough top line and gross margin are healthy, operating losses, volatile net results and slightly negative FCF undermine long‑term planning. Inconsistent profitability raises execution risk, increases reliance on external capital during downturns, and limits ability to self‑fund expansion.