What happened

Shares of defense contractor Cubic Corporation (CUB) dropped nearly 13% in early Tuesday trading, before retracing to end the day down "only" 10.8% by close of trading.

So what

Cubic Corporation reported its fiscal second-quarter 2017 earnings after close of trading on Monday, meaning that Tuesday's traders were the ones to get first crack at reacting to the news -- and react they did.

For fiscal Q2, Cubic reported a 6% decline in sales to $343.7 million, and a 95% decrease in profits -- to just $0.02 per share. And while investors were expecting a big decline (analysts had forecast $0.04 per share), the size of this disappointment took them somewhat by surprise.

It's also done something of a number on Cubic's results for the year to date. Last year, Cubic booked an $0.18-per-share profit in its first half. But thanks to Q2's big loss, earnings per share at the company are now $0.09 in the red -- and Cubic faces the prospect of digging itself out of a hole if it hopes to earn any sort of profit at all this year. For the record, analysts are still hoping to see Cubic end the year with $0.61 in (positive) profits.

Cartoon of a stock chart falling through the floor

"Has it stopped falling yet?" Image source: Getty Images.

Now what

Will the company get there? Management doesn't seem so sure it will. Warning that "guidance for the current fiscal year is highly dependent on the order intake for our short order cycle businesses," Cubic took a cautious tone in issuing revised guidance for the rest of this year. As of today, management sees sales of between $1.5 billion and $1.54 billion as attainable (and Wall Street is on board with that, predicting sales of $1.52 billion).

As for profits, though, Cubic says "EPS guidance has been withdrawn due to the potential for income tax expense volatility." The company simply isn't sure how much it will earn on those revenues this year...and given how bad the news on Q2 was, investors aren't waiting around to find out.