What: Shares ofNewpark Resources Inc fell more than 15% in early trading on Wednesday. Fueling the falling stock price was a warning from the company that the third-quarter results from its fluids and mats business segments would be soft.
So what: Newpark Resources' businesses are being affected by the continued weakness in commodity prices. As a result, the company expects operating results from its fluids systems segment to be flat from last quarter, which is weaker guidance than the company had previously provided. Likewise, its mats segment will be weaker than expected due to reduced activity levels particularly in the Northeast. As a result, the company expects revenue of $14 million to $16 million and a breakeven operating margin. That's well below the $23 million in revenue and $6.5 million in operating income from just last quarter.
On a slightly more positive note, the company did announce that it had been awarded an ultra-deepwater fluids contract with a major international oil company. The project, which is scheduled to begin in the second quarter of next year, is expected to generate $10 million in revenue for the company.
Now what: The near term continues to be challenging for companies that supply the energy industry, as activity levels remain low due to weak commodity prices. There isn't yet much visibility on the horizon as to whether conditions will improve, and that uncertainty will continue to weigh on shares of Newpark Resources for the foreseeable future.
The article Here's What Fueled Newpark Resources Inc's 15% Drop Today originally appeared on Fool.com.
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