NEW YORK, July 31 /PRNewswire-FirstCall/ -- NYMEX Holdings, Inc. (NYSE: NMX), parent company of the New York Mercantile Exchange, Inc. (NYMEX), today reported that total operating revenues for the second quarter ended June 30, 2007 rose 34% to $163.6 million compared to $122.5 million for the second quarter 2006. Net income for the second quarter 2007 increased 9% to $41.7 million compared to $38.1 million for the second quarter 2006, including a one-time, pretax charge of $26.0 million related to an impairment of the NYMEX investment in energy derivatives broker Optionable, Inc. Diluted earnings per share for the second quarter 2007 were $0.44, based on 94.8 million shares outstanding, compared to $0.44, based on 81.6 million shares outstanding for the second quarter 2006.
In connection with NYMEX's acquisition of a 19% stake in energy derivatives broker Optionable, Inc. completed on April 10, 2007, we have determined that the value of our investment has been impaired and have thus recorded a one-time, pretax charge to earnings in the second quarter of $26.0 million, or $0.16 per share. Excluding the one time charge, net income increased 48% to $56.4 million, and diluted earnings per share was $0.60 for the second quarter.
For the six months ended June 30, 2007, NYMEX reported record total operating revenues of $327.8 million, a 40 % increase from $234.2 million for the first half of 2006. Net income rose 37% to $98.0 million, versus $71.8 million in the first half of 2006. Diluted earnings per share for the 2007 first half was $1.03 versus $0.88 per diluted share in the 2006 period, based on 94.8 million and 78.4 million shares outstanding, respectively. Excluding the one-time charge, net income increased 57% to $112.6 million and diluted earnings per share was $1.19 for the 2007 six month period.
"We are pleased to deliver another quarter of solid operating performance as we continue to deliver on our strategic goals," commented NYMEX Chairman, Richard Schaeffer. "We have continued to achieve volume or open interest records in a number of our benchmark futures and options contracts, including crude oil, RBOB gasoline, heating oil and gold. Our long term strategic initiative in Dubai was furthered by the launch of our Dubai Mercantile Exchange, representing a significant achievement in offering another benchmark to global risk managers and users of sour crude, and demonstrates our expertise in launching products and developing new marketplaces globally. We continue our efforts to implement our growth initiatives to expand global distribution."
NYMEX President and Chief Executive Officer James E. Newsome stated, "In our Dubai strategic venture, we are pleased by the consistent progress our Dubai Mercantile Exchange venture has achieved through launch and continued growth in volume and open interest. We continue to believe the Oman crude contract will become the sour crude contract of choice for global risk managers and users. As the energy and metals industry leader and innovator, we remain focused on satisfying evolving customer demand by bringing to market new contracts, such as a new last day Brent contract, as well as diesel, ethanol and our recently announced steel futures. We also launched energy and metals options on CME Globex®, as well as on our NYMEX ClearPort® clearing platform, which is part of our strategy to provide multiple venues for our users to trade and clear contracts. We continue our efforts to realize improvements in profitability."
Second Quarter Results
Clearing and transaction fees rose 33% for the second quarter 2007 to $137.4 million compared to $103.3 million for the year ago period. An increased fee schedule which applied to NYMEX Division member rates became effective May 1, and was in effect for two months of the second quarter. Market data fees increased 47% for the second quarter 2007, to $23.4 million versus $15.9 million for the second quarter 2006.
Average daily volume was 1.396 million contracts during the second quarter 2007, a 23% increase over the second quarter of 2006. NYMEX electronic volume on CME Globex was an average of 608,000 contracts per day and represented a 443% increase over second quarter 2006 electronic volume. NYMEX floor-traded energy futures and options averaged 257,000 contracts a day for the second quarter of 2007, versus 537,000 contracts per day for the same period of 2006. COMEX electronic volume on CME Globex averaged 101,000 contracts per day, an increase of 494% over second quarter 2006 electronic volume. COMEX metals open outcry average daily volume was 42,000 contracts for the second quarter of 2007, versus 128,000 contracts per day for the same period of 2006. Average daily volume on NYMEX ClearPort increased 12% in the second quarter of 2007 to 309,000 contracts, from 276,000 contracts in the comparable period of 2006. The remaining volume of 79,000 trades per day consisted of other transactions which includes position transfers and exchanges.
Total operating expenses, excluding direct transaction costs of $24.3 million, were $41.8 million for the second quarter of 2007. This represents an 8% decrease from $45.3 million for the same period in 2006, driven primarily by the Company's cost cutting initiatives.
Income before provision for income taxes was $74.0 million for the second quarter 2007, compared to $69.3 million for the second quarter 2006. Excluding the one-time charge, income before provision for income taxes was $100.0 million. Pretax margin, defined as income before provision for income taxes divided by operating revenues, investment income and interest income from securities lending (net of interest expense/fees from securities lending and direct transaction costs), was 51% in the second quarter 2007, compared to 59% in second quarter 2006. Excluding the one-time charge, pretax margin was 68%.
Six Month Results
Clearing and transaction fees rose 41% for the six months ended June 30, 2007 to $275.6 million, compared to $195.8 million for the year ago period. Market data fees were $46.5 million for the six month period, versus $31.3 million for the six months of 2006, an increase of 49%.
Average daily volume for the first six months of 2007 was 1.454 million contracts, a 31% increase over the first six months of 2006. NYMEX electronic volume on CME Globex was an average of 603,000 contracts per day and represented a 464% increase over the six month period of 2006 electronic volume. NYMEX floor-traded energy futures and options averaged 293,000 contracts a day for the first six months of 2007. COMEX electronic volume on CME Globex averaged 96,000 contracts per day, an increase of 586% over the first six months of 2006 electronic volume. COMEX metals open outcry average daily volume was 49,000 contracts a day for the first half of 2007. Average daily volume on NYMEX ClearPort increased 31% in the first half of 2007 to 340,000 contracts, from 259,000 contracts in the comparable period of 2006. The remaining volume of 73,000 trades per day consisted of other transactions which includes position transfers and exchanges.
Total operating expenses for the first half of 2007, excluding direct transaction costs of $48.4 million, were $86.2 million. This represents a 3% decrease from $88.5 million for the same period in 2006, driven primarily by the Company's cost cutting initiatives.
Income before provision for income taxes was $173.7 million for the first six months of 2007, compared to $131.1 million for the same period of 2006. Excluding the one-time charge, income before provision for income taxes was $199.7 million for the first six months of 2007. Pretax margin, defined as income before provision for income taxes divided by operating revenues, investment income and interest income from securities lending (net of interest expense/fees from securities lending and direct transaction costs), was 59% in the first half of 2007 and 2006. Excluding the one-time charge, pretax margin was 68% for the first six months of 2007.
Investor Conference Call / Webcast Details
NYMEX will hold a conference call to discuss 2007 second quarter and six month results today, July 31, 2007 at 8:00 AM Eastern Time. Those wishing to participate in the conference call can dial (800) 299-7928 (U.S. and Canada) or (617) 614-3926 (International), using the confirmation code 98223409. A live audio webcast of the call will also be available on the Investor Relations section of the NYMEX website at http://investor.nymex.com/. Additionally, an archived version of the conference call will also be available within approximately 90 minutes of the conclusion of the call.
About NYMEX Holdings, Inc.
NYMEX Holdings, Inc. (NYSE: NMX) is the parent company of the New York Mercantile Exchange, Inc. (NYMEX), the world's largest physical commodity futures and options exchange. NYMEX offers futures and options trading in energy, metals and soft commodities contracts and clearing services for more than 320 off-exchange energy contracts. Through a hybrid model of open outcry floor trading and electronic trading on CME Globex® and NYMEX ClearPort®, NYMEX offers crude oil, petroleum products, natural gas, coal, electricity, gold, silver, copper, aluminum, platinum group metals, and soft commodities contracts for trading and clearing virtually 24 hours a day. Further information about NYMEX Holdings, Inc. and the New York Mercantile Exchange, Inc. is available on the NYMEX website at http://www.nymex.com/.
Forward-Looking and Cautionary Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to our future performance, operating results, strategy, and other future events. Such statements generally include words such as could, can, anticipate, believe, expect, seek, pursue, and similar words and terms, in connection with any discussion of future results. Forward-looking statements involve a number of assumptions, risks, and uncertainties, any of which may cause actual results to differ materially from the anticipated, estimated, or projected results referenced in forward-looking statements. In particular, the forward-looking statements of NYMEX Holdings, Inc., and its subsidiaries are subject to the following risks and uncertainties: the success and timing of new futures contracts and products; changes in political, economic, or industry conditions; the unfavorable resolution of material legal proceedings; the impact and timing of technological changes and the adequacy of intellectual property protection; the impact of legislative and regulatory actions, including without limitation, actions by the Commodity Futures Trading Commission; and terrorist activities and international hostilities, which may affect the general economy as well as oil and other commodity markets. We assume no obligation to update or supplement our forward-looking statements.
(Tables Follow)
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
Three Months Ended Six Months Ended
June 30, June 30,
Operating Revenues 2007 2006 2007 2006
Clearing and
transaction fees $137,390 $103,346 $275,567 $195,766
Market data fees 23,363 15,912 46,500 31,294
Other, net 2,844 3,257 5,756 7,125
Total operating
revenues 163,597 122,515 327,823 234,185
Operating Expenses
Direct transaction
costs 24,318 8,054 48,420 14,937
Salaries and employee
benefits 20,482 19,172 41,520 37,486
Occupancy and
equipment 5,604 5,793 11,547 14,038
Depreciation and
amortization, net of
deferred credit
amortization 3,614 4,914 7,145 8,248
General and
administrative 4,945 5,332 9,642 10,630
Professional services 3,922 4,207 8,108 7,533
Telecommunications 1,417 1,813 2,840 3,491
Marketing 1,626 1,826 3,559 2,739
Other expenses 182 2,200 1,843 4,350
Total operating
expenses 66,110 53,311 134,624 103,452
Operating income 97,487 69,204 193,199 130,733
Non-Operating Income and
Expenses
Investment income 6,133 1,354 12,840 2,814
Interest income from
securities lending 31,087 33,275 60,493 60,517
Interest expense/fees
from securities
lending (30,136) (32,444) (59,025) (58,900)
Interest expense (1,612) (1,666) (3,224) (3,334)
Losses from
unconsolidated
investments (28,944) (382) (30,587) (776)
Total non-operating
income and expenses (23,472) 137 (19,503) 321
Income before
provision for income
taxes 74,015 69,341 173,696 131,054
Provision for income
taxes 32,270 31,208 75,731 59,288
Net income $41,745 $38,133 $97,965 $71,766
Proforma weighted
average common shares
outstanding and
earnings per share
retroactively
adjusted to reflect
the 90,000-for-1
recapitalization on
March 14, 2006:
Earnings per Share
Basic $0.44 $0.44 $1.04 $0.88
Diluted $0.44 $0.44 $1.03 $0.88
Weighted Average Number
of Common Shares
Outstanding
Basic 94,450,000 81,600,000 94,450,000 78,354,000
Diluted 94,798,000 81,600,000 94,784,000 78,354,000
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, December 31,
Assets 2007 2006
Cash and cash equivalents $17,112 $18,631
Collateral from securities
lending program 2,331,507 2,547,312
Marketable securities, at market
value 455,740 485,581
Clearing and transaction fees
receivable, net of allowance for
member credits 47,780 32,853
Prepaid expenses 7,234 7,009
Margin deposits and guaranty
funds 8,418 17,052
Other current assets 43,691 10,238
Total current assets 2,911,482 3,118,676
Property and equipment, net 178,532 183,193
Goodwill and indefinite-lived
intangible asset 307,125 307,125
Long-term investments 118,422 3,008
Other assets 9,499 11,929
Total assets $3,525,060 $3,623,931
Liabilities and Stockholders' Equity
Accounts payable and accrued
liabilities $16,670 $14,854
Accrued salaries and related
liabilities 12,563 13,688
Payable under securities lending
program 2,331,507 2,547,312
Margin deposits and guaranty
funds 8,418 17,052
Income tax payable 7,586 4,984
Other current liabilities 32,852 35,019
Total current liabilities 2,409,596 2,632,909
Grant for building construction
deferred credit 105,093 106,166
Long-term debt 80,281 80,281
Retirement obligation 11,966 12,367
Other liabilities 29,824 17,286
Total liabilities 2,636,760 2,849,009
Total stockholders'
equity 888,300 774,922
Total liabilities and
stockholders' equity $3,525,060 $3,623,931
Non-GAAP Reconciliation
The following table reconciles net income to adjusted net income and
calculates adjusted earnings per common share on adjusted income.
(in thousands, except share amounts)
Three Months Six Months
Ended Ended
June 30, 2007 June 30, 2007
Net income $41,745 $97,965
Add: Impairment loss on
investment in Optionable 25,962 25,962
Less: Effective tax rate benefit
of impairment loss on investment in
Optionable 11,319 11,319
Adjusted net income $56,388 $112,608
Earnings per common share on net
income:
Basic $0.44 $1.04
Diluted $0.44 $1.03
Adjusted earnings per common share on
adjusted net income:
Adjusted basic $0.60 $1.19
Adjusted diluted $0.60 $1.19
Weighted average common shares
outstanding:
Basic 94,450,000 94,450,000
Diluted 94,798,000 94,784,000
Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006
Trading Days 63 61 62 62 63
Average Daily Volume
(round turns, in thousands, difference is due to rounding)
Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006
NYMEX Floor 257 330 362 528 537
NYMEX Electronic 608 597 368 197 112
COMEX Floor 42 56 76 88 128
COMEX Electronic 101 90 16 8 17
NYMEX ClearPort 309 373 302 436 276
Other 79 68 75 65 64
Total 1,396 1,513 1,199 1,324 1,132
Gross Clearing and Transaction Revenue (in thousands)
Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006
NYMEX Floor $19,966 $23,664 $24,497 $36,097 $37,453
NYMEX Electronic 50,520 43,271 24,953 18,260 13,035
COMEX Floor 3,249 4,244 5,795 6,711 10,136
COMEX Electronic 9,791 8,253 2,000 1,736 3,508
NYMEX ClearPort 44,281 49,609 38,837 48,326 32,029
Other 9,583 9,136 8,683 8,069 7,185
Total $137,390 $138,177 $104,765 $119,200 $103,346
Net Rates Per Contract
Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006
NYMEX Floor $1.23 $1.18 $1.10 $1.10 $1.11
NYMEX Electronic 1.02 0.89 0.70 1.07 1.85
COMEX Floor 1.24 1.25 1.23 1.22 1.26
COMEX Electronic 1.19 1.20 1.99 3.35 3.36
NYMEX ClearPort 1.72 1.66 1.58 1.36 1.42
Other 1.92 2.19 1.88 2.00 1.81
Total Net RPC 1.29 1.24 1.17 1.25 1.33
Direct Cost 0.28 0.26 0.24 0.20 0.12
Gross RPC $1.56 $1.50 $1.41 $1.45 $1.45
SOURCE: NYMEX Holdings, Inc.
CONTACT: Investor Contact - Keil Decker, +1-212-299-2209, or Media
Contact - Anu Ahluwalia, +1-212-299-2439, both for NYMEX Holdings, Inc.
Web site: http://www.nymex.com/
Contact Us
+1 312 930 3434
Corporate.Communications@cmegroup.com
