MATRIX SERVICE CO

Previous wording

We operate our business through three reportable segments:

Current wording

We operate our business through a number of different operating subsidiaries, which are organized into three reportable segments based on the type of work performed and the markets serviced:

Previous wording

•Storage and Terminal Solutions: primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs, hydrogen, ammonia, propane, butane, liquid nitrogen/liquid oxygen, and liquid petroleum. We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals. This segment also includes terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures as well as storage tank and terminal maintenance and repair. Finally, we manufacture and sell precision engineered specialty tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

Current wording

•Storage and Terminal Solutions: primarily consists of engineering, procurement, fabrication, and construction services related to cryogenic and other specialty tanks and terminals for LNG, NGLs such as butane, propane, ethane, ethylene, and other liquid petroleum products, as well as hydrogen and ammonia. We also perform work related to traditional aboveground crude oil and refined product storage tanks and terminals. This segment also includes terminal balance of plant work, truck and rail loading/offloading facilities, and marine structures as well as storage tank and terminal maintenance and repair. Finally, we manufacture and sell precision engineered specialty tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.

Previous wording

•Utility and Power Infrastructure: primarily consists of engineering, procurement, fabrication, and construction services to support growing demand for LNG utility peak shaving facilities. We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance. We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations.

Current wording

•Utility and Power Infrastructure: primarily consists of engineering, procurement, fabrication, and construction services to support growing demand for LNG utility peak shaving facilities. We also perform power delivery work for public and private utilities, including construction of new substations, upgrades of existing substations, and maintenance. We also provide construction services to a variety of power generation facilities, including natural gas fired facilities in simple or combined cycle configurations for base load, peaking, and backup power supply.

Previous wording

•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and natural gas liquids. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals primarily in the extraction of non-ferrous metals, cement, agriculture, wastewater treatment facilities and other industrial customers.

Current wording

•Process and Industrial Facilities: primarily consists of plant maintenance, repair, and turnarounds in the downstream and midstream markets for energy clients including refining and processing of crude oil, fractionating, and marketing of natural gas and natural gas liquids. We also perform engineering, procurement, fabrication, and construction for refinery upgrades and retrofits for renewable fuels, including hydrogen processing, production, loading and distribution facilities. We also engineer and construct thermal vacuum test chambers for aerospace and defense industries and other infrastructure for industries including chemicals, petrochemical, sulfur, mining and minerals, cement, agriculture, wastewater treatment facilities and other industrial customers.

Previous wording

Operating activity increased during the third quarter of fiscal 2025 as revenues showed a 13% increase from second quarter of 2025. The increase was driven primarily by an increase in activity for refinery maintenance and turnaround services. As we move forward through the coming quarters, we believe activity levels will rise for projects currently in backlog.

Current wording

Operating activity increased during the first quarter of fiscal 2026 as revenues showed a 28% increase compared to the first quarter of 2025. The increase was driven primarily by an increase in activity for LNG storage, LNG peak-shaver, and specialty vessel projects. Strong project execution on our projects, along with improved overhead cost absorption, generated higher gross margins compared to the same period in prior year. As we move forward through the coming quarters of fiscal 2026, we believe activity levels will rise for projects currently in backlog.

Previous wording

Project awards during the quarter were $301.2 million, resulting in a current quarter book-to-bill of 1.5x. Award activity was driven by our Storage and Terminal Solutions segment, and included the award of a large specialty storage project. The market drivers for each of our segments are strong and include increased oil and gas demand, the clean energy transition, low-cost feed stock, data center energy demand, industrial reshoring/onshoring, grid reliability and electrical supply assurance. As a result, we believe we will have strong award activity in the coming quarters. While our award activity in the quarter was strong, heightened macroeconomic uncertainty and the evolving impact of U.S. trade policy on infrastructure economics has impacted the timing of customer decisions in the near term. We believe customer delays in project starts and final investment decisions to be a short-term disruption, while an overall favorable regulatory environment for our customers underpins long-term momentum for our business.

Current wording

Project awards during the quarter were $187.8 million, resulting in a current quarter book-to-bill of 0.9x. Award activity was driven by our Storage and Terminal Solutions segment, and included the award for the construction for the balance of plant supporting a dual service full containment storage tank. The market drivers for each of our segments are strong and include increased oil and gas demand, the clean energy transition, low-cost feed stock, data center energy demand, industrial reshoring/onshoring, grid reliability and electrical supply assurance.

Previous wording

We continue to sharpen and better align our business for the current and coming marketplace. Accordingly, during the third and fourth quarters, we are consolidating certain aspects of the business to further improve our performance and create a flatter, leaner management structure. In addition, we continue to evaluate our business lines and, where appropriate, reallocate resources to those businesses that present the best opportunities. We remain focused on delivering sustainable, long-term shareholder value by building a resilient, growth-oriented platform aligned with the evolving needs of our customers.

Current wording

While we always strive to maximize efficiency, we commenced an initiative in the fourth quarter of fiscal 2025 to sharpen and better align our business for the current and coming marketplace. Accordingly, we have consolidated certain aspects of the business to further improve our performance and create a flatter, leaner management structure. In addition, we continue to evaluate our business lines and, where appropriate, reallocate resources to those businesses that present the best opportunities. We remain focused on delivering sustainable, long-term shareholder value by building a resilient, growth-oriented platform aligned with the evolving needs of our customers. We believe actions taken in the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026 will reduce our overall cost structure, improving our overhead recovery and operating leverage.

Previous wording

For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months. For arrangements in which we have received a LNTP, we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding is probable. For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.

Current wording

For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months. For arrangements in which we have received a LNTP, we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding is probable. For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date. Backlog differs from the amount of our remaining performance obligations, which are described in Note 2 - Revenue in the notes to the unaudited consolidated financial statements. Differences are due primarily to the inclusion within our backlog of estimates of future revenue under long-term maintenance contracts; future revenue for the full scope of work for certain arrangements where we have received an LNTP; and future revenue for arrangements where we have received assurance that we consider firm, but the associated contract has not been fully executed.

Previous wording

In the Storage and Terminal Solutions segment, we booked $204.8 million of project awards during the third quarter of fiscal 2025. Project awards included a project for the engineering and construction of large refrigerated propane and butane tanks as well as spheres for related NGL products. During the nine months ended March 31, 2025, we booked $319.3 million of project awards. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG and ammonia projects in particular will be key growth drivers for this segment. Bidding activity on LNG and ammonia projects has been strong and we expect that to continue.

Current wording

In the Storage and Terminal Solutions segment, we booked $136.1 million of project awards during the first quarter of fiscal 2026. Project awards included a large award for the construction for the balance of plant supporting a dual service full containment storage tank. This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, NGLs and other forms of low carbon energy. We believe LNG, NGLS and ammonia projects in particular will be key growth drivers for this segment. Bidding activity in these markets has been strong and we expect that to continue.

Previous wording

In the Utility and Power Infrastructure segment, we booked $37.7 million of project awards during the third quarter of fiscal 2025. During the nine months ended March 31, 2025, we booked $93.5 million of project awards. Our opportunity pipeline for LNG peak shaving projects continues to be promising; however those awards, while significant, can be less frequent. Power delivery opportunities are expected to be driven over the long-term by increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong for both the power delivery portion of the business and LNG peak shaving.

Current wording

-18- increasing electrical demand and the related electrical grid requirements. Project opportunities and bidding activity are strong across the segment.

Previous wording

Revenue - The increase in consolidated revenue of $34.1 million, or 21%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments, partially offset by reduced revenue volumes in Process and Industrial Facilities.

Current wording

Revenue - The increase in consolidated revenue of $46.3 million, or 28%, was primarily attributable to higher revenue volumes in our Storage and Terminal Solutions and Utility and Power Infrastructure segments.

Previous wording

Gross profit - Gross profit in the third quarter of fiscal 2025 increased $7.3 million, or 130%, compared to the third quarter of fiscal 2024. Gross margin of 6.4% for the third quarter of fiscal 2025 increased compared with gross margin of 3.4% for the third quarter of fiscal 2024. The increase in gross margin for the quarter is attributable to higher gross margins in our Utility and Power Infrastructure and Process and Industrial Facility segments.

Current wording

Gross profit - Gross profit in the first quarter of fiscal 2026 increased $6.4 million, or 82%, compared to the first quarter of fiscal 2025. The increase was primarily attributable to the Utility and Power Infrastructure and Storage and Terminal Solutions segments. Gross margin of 6.7% for the first quarter of fiscal 2026 increased compared with gross margin of 4.7% for the first quarter of fiscal 2025. The increase in gross margin for the quarter is attributable to higher gross margins in our Utility and Power Infrastructure segment.

Previous wording

Selling, general and administrative expenses - The decrease in SG&A expenses of $2.2 million, or 11%, is primarily due to a decrease in cash-settled stock-based compensation of $1.6 million.

Current wording

Selling, general and administrative expenses - The decrease in SG&A expenses of $2.2 million, or 12%, is primarily due to cost reductions resulting from our organizational realignment.

Previous wording

Interest income - The increase in interest income of $1.4 million is primarily due to an increase in our cash balance.

Current wording

Interest income - The increase in interest income of $0.2 million is primarily due to an increase in our cash balance.

Previous wording

Provision for income taxes - Our effective tax rates for the three months ended March 31, 2025 and March 31, 2024 were zero. The effective tax rates during both periods were impacted by valuation allowances of $1.2 million and $4.4 million respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

Current wording

Provision for income taxes - Income tax expense for both periods was insignificant. The effective tax rates during both periods were impacted by valuation allowances of $1.4 million and $1.3 million respectively, placed on deferred tax assets generated during the quarters. We placed a valuation allowance on our deferred tax assets due to the existence of a cumulative loss over a three-year period. Currently, we place valuation allowances on newly generated deferred tax assets. We will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided as we generate taxable income.

Previous wording

Storage and Terminal Solutions revenues increased by $41.8 million, or 77%, in the three months ended March 31, 2025 compared to the same period last year, driven by an increased volume of work for specialty vessel and LNG storage projects.

Current wording

Storage and Terminal Solutions revenues increased by $31.2 million, or 40%, in the three months ended September 30, 2025 compared to the same period last year, driven by an increased volume of work for LNG storage and specialty vessel projects.

Previous wording

Utility and Power Infrastructure revenues increased by $12.6 million, or 27%, in the three months ended March 31, 2025 compared to the same period last year. The increase is primarily attributable to a higher volume of work for natural gas peak shaving projects.

Current wording

Utility and Power Infrastructure revenues increased by $18.6 million, or 33%, in the three months ended September 30, 2025 compared to the same period last year. The increase is primarily attributable to a higher volume of work for power delivery and natural gas peak shaving projects.

Previous wording

Utility and Power Infrastructure gross profit increased by $4.1 million, or 293%, in the three months ended March 31, 2025 compared to the same period last year. The segment gross margin was 9.4% for the three months ended March 31, 2025 compared to 3.1% in the same period last year, an increase of 6.3% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Current wording

Utility and Power Infrastructure gross profit increased by $5.5 million, or 419%, in the three months ended September 30, 2025 compared to the same period last year. The segment gross margin was 9.1% for the three months ended September 30, 2025 compared to 2.3% in the same period last year, an increase of 6.8% due to strong project execution and improved construction overhead cost absorption as a result of higher revenues.

Previous wording

Process and Industrial Facilities revenues decreased by $20.2 million, or 31%, in the three months ended March 31, 2025 compared to the same period last year. The decrease is primarily attributable to lower revenue volumes resulting from the completion of a large renewable diesel project. We believe this reduction in revenue is temporary given our strong backlog, including a significant gas processing construction project that is expected to commence in early fiscal 2026.

Current wording

Process and Industrial Facilities revenues decreased by $3.5 million, or 11%, in the three months ended September 30, 2025 compared to the same period last year. The decrease is primarily attributable to lower revenue volumes for the engineering and construction of thermal vacuum chambers.

Previous wording

Process and Industrial gross profit decreased by $7.4 million, or 55%, in the nine months ended March 31, 2025 compared to the same period last year. The segment gross margin was 5.7% for the nine months ended March 31, 2025 compared to 6.4% in the same period last year. The segment gross margin in the current period was impacted by higher levels of under-recovery of construction overhead costs due to lower revenue.

Current wording

Process and Industrial Facilities gross profit decreased by $0.6 million, or 28%, in the three months ended September 30, 2025 compared to the same period last year. The segment gross margin was 5.1% for the three months ended September 30, 2025 compared to 6.4% in the same period last year. The decrease is primarily attributable to mix of work. Segment gross margins in both periods were impacted by under-recovery of construction overhead costs due to lower revenue volumes.

Previous wording

Unrestricted cash and cash equivalents at March 31, 2025 totaled $185.5 million and availability under the ABL Facility totaled $61.5 million, resulting in total liquidity of $247.1 million. During the third quarter of fiscal 2025, liquidity increased $35.4 million primarily as a result of cash provided by operating activities.

Current wording

Unrestricted cash and cash equivalents at September 30, 2025 totaled $192.3 million and availability under the ABL Facility totaled $56.6 million, resulting in total liquidity of $248.9 million. During the first quarter of fiscal 2026, liquidity decreased $35.5 million primarily as a result of cash used by operating activities.

Previous wording

The following table provides a summary of changes in our liquidity for the nine months ended March 31, 2025 (in thousands):

Current wording

The following table provides a summary of changes in our liquidity for the three months ended September 30, 2024 (in thousands):

Previous wording

We have an asset-based credit agreement, which was most recently amended on May 3, 2024 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer. The maximum amount of loans under the ABL Facility is limited to $90.0 million. The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes. Our obligations under the ABL Facility are guaranteed by substantially all of our U.S. and Canadian subsidiaries and are secured by a first lien on all our assets under the ABL Facility. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2026.

Current wording

We have an asset-based credit agreement, which was most recently amended on August 22, 2025 (as amended, the "ABL Facility"), with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer. The maximum amount of loans under the ABL Facility is limited to $90.0 million. The ABL Facility's available borrowings may be increased by an amount not to exceed $15.0 million, subject to certain conditions, including obtaining additional commitments. The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes. Our obligations under the ABL Facility are guaranteed by substantially all of our U.S. and Canadian subsidiaries and are secured by a first lien on all our assets under the ABL Facility. The ABL Facility matures, and any outstanding amounts become due and payable, on September 9, 2029.

Previous wording

The borrowing base is recalculated on a monthly basis and at March 31, 2025, our borrowing base was $66.3 million. We had no borrowings outstanding and $4.8 million in letters of credit outstanding as of March 31, 2025, which resulted in availability of $61.5 million under the ABL Facility. For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 4 - Debt."

Current wording

The borrowing base is recalculated on a monthly basis and at September 30, 2025, our borrowing base was $61.4 million. We had no borrowings outstanding and $4.8 million in letters of credit outstanding, which resulted in availability of $56.6 million under the ABL Facility. For additional information regarding our ABL Facility, see Item I of Part I, "Financial Statements - Note 3 - Debt."

Previous wording

The significant components of the $80.7 million change in operating assets and liabilities for the nine months ended March 31, 2025 are summarized as follows:

Current wording

The significant components of the $28.0 million change in operating assets and liabilities for the three months ended September 30, 2025 are summarized as follows:

Previous wording

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $43.1 million, which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections, partially offset by $16.8 million we received as full payment for the favorable resolution of a legal matter.

Current wording

-24- classified as non-current, increased by $15.1 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

Previous wording

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $10.3 million which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $82.2 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments.

Current wording

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $8.1 million which decreased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $6.0 million which decreased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

Previous wording

•Accounts payable increased by $13.0 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Current wording

•Accounts payable increased by $17.7 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Previous wording

•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $1.2 million which decreased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences.

Current wording

•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $9.1 million which decreased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences. We generally prepay our annual insurance premiums in the first quarter of the fiscal year.

Previous wording

•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased by $1.1 million which increased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Current wording

•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $7.3 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Previous wording

The significant components of the $36.4 million change in operating assets and liabilities for the nine months ended March 31, 2024 are summarized as follows:

Current wording

The significant components of the $16.2 million change in operating assets and liabilities for the three months ended September 30, 2024 are summarized as follows:

Previous wording

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $88.8 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

Current wording

•Accounts receivable, excluding credit losses recognized during the period and including retention amounts classified as non-current, increased by $5.1 million which decreased cash flows from operating activities. The increases are primarily attributable to the timing of billing and collections.

Previous wording

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $4.7 million which decreased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $161.3 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments.

Current wording

•Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $2.1 million which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $33.3 million which increased cash flows from operating activities. CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments. Some fixed-price customer contracts allow for significant upfront billings at the beginning of a project, which increases liquidity near-term.

Previous wording

•Accounts payable decreased by $20.9 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Current wording

•Accounts payable decreased by $3.9 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on business volumes; the timing of vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Previous wording

•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, decreased $3.8 million, which increased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences.

Current wording

•Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $7.3 million which decreased cash flows from operating activities. These operating assets can fluctuate based on business volumes; the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable; prepayments of certain expenses; lease commencement, passage of time, expiration, or termination of operating leases; and other timing differences. We generally prepay our annual insurance premiums in the first quarter of the fiscal year.

Previous wording

•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current increased by $4.1 million increased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.

Current wording

•Accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $2.9 million which decreased cash flows from operating activities. These operating liabilities can fluctuate based on the timing of payroll, distributions, business volumes; vendor payments; accruals; lease commencement, lease payments, expiration, or termination of operating leases; and other timing differences.