With the oil market downturn still raging, 2015 has been a challenging year for the entire energy industry. Those challenges continued in the third quarter after the price of oil plunged more than 20% from its peak the prior quarter. Given that backdrop, here are a few things to keep an eye on when NOW (NYSE:DNOW) reports its third-quarter results on Tuesday morning.

First, let's review
Last quarter was a tough one for NOW, with the company reporting revenue that fell 13% sequentially to $750 million. That number would have been worse if it weren't for recent acquisitions, without which revenue would have slumped 17%. Despite the positive impact acquisitions had on revenue, they could not help pad the bottom line and resulted in a loss of $19 million, or $0.18 per share, which was twice as steep as the decline it reported in the first quarter.

Those were very weak results, especially in light of what industry leader MRC Global (NYSE:MRC) accomplished last quarter. MRC Global's sales were only down 7.3% sequentially, to $1.2 billion. In addition, it actually reported a profit, generating $15 million, or $0.15 per share, of net income.

Are expenses continuing to fall?
One of the key trends during this slump has been the ability of energy-related companies to reduce their costs to take away some of the downturn's sting. Since the slide started, NOW has reduced its quarterly warehousing, selling, and administrative expenses by $28 million, or $41 million excluding acquisitions. This is a number that investors need to see continuing to come down this quarter to help offset some of the declining revenue.

How did the international segment hold up?
Last quarter, NOW's international segment's revenue was flat year over year thanks in part to acquisitions as well as the fact that the international rig count has held up much better than the rig count in North America.

Segment 

2Q15 Revenue

2Q14 Revenue

United States

 $496 million

 $662 million

Canada

 $89 million

 $125 million

International

 $165 million

 $165 million

Data source: NOW press release.

Investors should look to see if the company saw similar stability with international revenue again this quarter or if conditions worsened overseas. Incidentally, this was one area where NOW outperformed MRC Global, whose international sales plunged 29.1% year over year due in part to the strong dollar, something NOW investors should keep an eye on because it could have had an impact on sales this quarter both internationally and in Canada.

Any changes in light of the outlook?
As NOW CEO Robert Workman said last quarter:

It's been a challenging first half of the year across the industry. Looking forward, we will be steadfast in executing our long-term growth strategy while weathering this downturn. Although we saw some modest growth in rig counts in July, recent oil price declines make the timing of a recovery uncertain...We will continue to manage through this cycle, be nimble and position NOW to achieve our objectives as the market recovers.

Clearly, the challenges of the first half of the year continued into the second, with the oil price decline he referenced accelerating from there leading to a lower rig count. Because of this, investors should be on the lookout for any changes the company is now making in light of this more muted outlook. In particular, look to see if it has reached the point where it needs to undertake a major restructuring to reduce its costs.

Investor takeaway
With oil prices and rig activity declining in the third quarter, it suggests that NOW's report won't be all that great. However, in the midst of those challenges, investors will want to see the company further reduce expenses while keeping a close eye on the ability of its international segment to continue to hold up. Also of importance is NOW's outlook, which could signal what steps the company takes next so that it can nimbly maneuver through the downturn.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends NOW. The Motley Fool recommends MRC Global. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.