What happened
Shares of NOW Inc (DNOW -0.61%) were down more than 12% by 3:00 p.m. EDT on Wednesday after the energy-equipment distribution company reported second-quarter results.
So what
NOW reported that sales jumped 30% versus last year's second-quarter, to $651 million. However, that was $24.7 million below what analysts expected. It's worth noting, however, that CEO Robert Workman pointed out in the earnings release that despite some headwinds, "our upstream operations in the U.S. performed better than expected, as did our Canadian business."
Further, even though revenue came in a bit lighter than analysts thought it would, the company's net loss was in line with the consensus estimate of a $0.10 per-share loss. That was an improvement not only from last year, but last quarter, thanks to its ability to tightly manage expenses.
Image source: Getty Images.
Meanwhile, the company offered a fairly upbeat outlook for the rest of the year. Workman stated that, "in the second half of 2017, we expect to reach positive EBITDA, and possibly EPS, excluding other costs, if market conditions and product margins hold." While there's growing concern that market conditions might not hold up because shale drillers in the U.S. have been cutting their budgets due to lower oil prices, these reductions aren't as drastic as we've seen in prior years.
Now what
Like many companies in the oil patch, NOW is working hard to get back into the black now that industry conditions are starting to improve. That said, the rebound hasn't come as quickly as many had hoped, which makes it questionable whether the company will return to profitability this year, especially since many drillers are trimming their budgets. What the company needs is for oil to move higher, so its customers keep spending money.
