NYMEX Holdings, Inc. (NYSE: NMX) (“NYMEX”), parent company of the New York Mercantile Exchange, Inc., today reported that total operating revenues for the fourth quarter ended December 31, 2006, rose 40 percent to $124.8 million compared to $88.9 million for the fourth quarter 2005. Net income for the fourth quarter 2006 increased 105 percent to $42.3 million compared to $20.7 million for the fourth quarter 2005. Diluted earnings per share rose for the fourth quarter 2006 to $0.48, based on 87.8 million shares outstanding, compared to $0.28, based on 73.4 million shares outstanding for the fourth quarter 2005.
The Company’s 2006 fourth quarter results include a one-time pretax gain of $2.9 million related to the sale of marketable securities. Excluding this one-time gain, pro forma diluted earnings per share would have been $0.46 for the 2006 fourth quarter, an increase of 64 percent over the 2005 fourth quarter.
For the year ended December 31, 2006, NYMEX reported record total operating revenues of $497.2 million, a 49 percent increase from $334.1 million for 2005. Net income rose 118 percent to a record $154.8 million, versus $71.1 million in 2005. Diluted earnings per share increased 96 percent to $1.90 from $0.97 per diluted share in 2005, based on 81.5 million and 73.4 million shares outstanding, respectively.
“NYMEX achieved a number of significant milestones in 2006 which strengthened our position as the world’s leading marketplace for energy and metals,” said NYMEX Chairman, Richard Schaeffer. “The most noteworthy achievement was our transition from a private, member-owned exchange of 135 years, to a public company listed on the New York Stock Exchange. This was a major success for us and confirms the confidence the Board, management and the investing public has in the long-term prospects of our business. We also expanded our relationship with the Chicago Mercantile Exchange (“CME”) to list our energy contracts on the CME Globex® electronic trading platform, giving our customers added speed, flexibility and worldwide distribution. Importantly, the 201 percent increase in electronic volume since the June listing on Globex demonstrates the competitive strengths of our hybrid, side by side trading formula. In addition, following our transaction with COMEX in September, we successfully launched all of the COMEX metals contracts, as well as new metals contracts, electronically on Globex.”
Mr. Schaeffer continued, “Strategically, we continue to explore untapped markets and product areas to expand the NYMEX presence as part of our growth strategy. We recently announced our forthcoming strategic investment in Optionable, Inc., a leading provider of natural gas and other energy derivatives brokerage services, which will enhance our position in the options trading space. We will continue to explore additional acquisitions and strategic investments. As we move into 2007, we remain focused on continuing to capitalize on the strength of our hybrid platform, expanding our distribution internationally, developing new product offerings, and streamlining our cost structure.”
"We are very pleased with our financial and operating performance in the fourth quarter and full year 2006, as we continued to execute on our strategy,” commented James E. Newsome, NYMEX President and Chief Executive Officer. “Strong increases in operating revenues and net earnings were driven by record volume growth and the continued expansion of electronic trading. We believe the volume growth in electronic trading of our products on the Globex platform represents a clear validation of our hybrid, side by side trading strategy. We also introduced more than 100 new products over the course of the year, most recently launching the first iPort energy futures index contracts and six new soft commodity futures contracts on CME Globex and the NYMEX ClearPort® clearing and trading platform.”
Fourth-Quarter Results
Clearing and transaction fees rose 41 percent for the fourth quarter 2006 to $104.8 million compared to $74.1 million for the year ago period. Market data fees were $16.4 million for the fourth quarter 2006, versus $11.5 million for the fourth quarter 2005, an increase of 43%.
Average daily volume was 1.2 million contracts during the fourth quarter 2006, a 36 percent increase over the fourth quarter of 2005. NYMEX electronic volume on CME Globex was 368,000 contracts per day and represented 378 percent increase over fourth quarter 2005 electronic volume. NYMEX floor traded energy futures and options averaged 362,000 contracts, a decrease of 20 percent over the fourth quarter of 2005. COMEX electronic volume averaged 16,000 per day (this includes 666,000 trades on CME Globex in December the first month COMEX traded on that platform). COMEX metals floor trading average daily volume was 76,000, a decrease of 36% over the fourth quarter of 2005. Average daily volume on NYMEX ClearPort Clearing increased 68 percent in the fourth quarter of 2006 to 302,000, from 180,000 in the comparable period of 2005. The remaining volume of 75,000 trades per day consisted of other transactions which includes position transfers and exchanges.
Total operating expenses, excluding direct transaction costs of $18.2 million, were $38.5 million for the fourth quarter of 2006. This represents a 16 percent decrease from $45.9 million for the same period in 2005, driven primarily by closure of the London trading floor operations, and the reduction in the accrued annual bonus and other accruals for the fourth quarter.
Income before provision for income taxes was $72.5 million for the fourth quarter 2006, compared to $38.4 million for the fourth quarter 2005. Pretax margin, defined as income before provision for income taxes divided by operating and non-operating income (net of interest expense/fees from securities lending and direct transaction costs), was 64 percent in the fourth quarter 2006, compared to 44 percent in fourth quarter 2005.
The Company reported net income of $42.3 million, or $0.48 per diluted share, for fourth quarter 2006, compared with $20.7 million, or $0.28 per diluted share, for the year ago quarter based on 87.8 million and 73.4 million shares outstanding, respectively. Results for the 2006 fourth quarter, as previously noted, included a one-time pretax gain of $2.9 million related to the sale of marketable securities, resulting in pro forma net income of $40.7 million, or $0.46 per diluted share for the year.
Full-Year 2006 Results
Revenues from clearing and transaction fees increased 51 percent, to $419.7 million, from $277.6 million for 2005. Market data fees were $63.6 million, versus $44.5 million for 2005, an increase of 43%.
Average daily volume was 1.2 million contracts for 2006, a 40 percent increase from 857,000 contracts in 2005. NYMEX electronic volume averaged 194,000 contracts per day in 2006, an increase of 208 percent over 2005. Electronic trading of COMEX metals contracts had an average daily volume of 13,000 contracts, up 86 percent from the 2005 level. NYMEX began migrating electronic trading to CME Globex in June, COMEX followed in December. For 2006, total electronic trading on CME Globex was 38.4 million contracts or 13 percent of total trading. Total NYMEX energy futures and options traded on the floor for 2006 was 122.5 million, or 492,000 contracts per day, as compared to a total of 120.5 million, or 480,000 contracts per day for 2005. COMEX floor traded futures and options totaled 26.8 million contracts in 2006, for an average daily volume of 108,000 contracts, as compared to total of 27.6 million and 110,000 contracts per day, for the year ago period. Average daily volume on NYMEX ClearPort Clearing increased 101 percent in 2006 to 314,000 contracts. A remaining volume of 62,000 trades per day consisted of other transactions including position transfers and exchanges.
Total operating expenses, excluding direct transaction costs of $49.7 million, were $174.4 million for 2006, compared with $178.1 million for 2005. This decrease was driven primarily by closure of the London trading floor operations and a reduction in professional fees as the prior year included significant costs related to our international expansion initiatives. This was offset in part by an increase in compensation expense which included $4.5 million of severance related costs. Direct transaction costs in 2006 were $49.7 million, compared to $29.2 million in 2005.
Income before provision for income taxes was $278.9 million for 2006, compared to $131.0 million for 2005. Pretax margin was 60 percent for 2006, compared to 41 percent during 2005. Net income for 2006 was $154.8 million, or $1.90 per diluted share, compared with $71.1 million, or $0.97 per diluted share, for 2005. Results for the year, as previously noted, included a one-time pretax gain of $2.9 million related to the sale of marketable securities, resulting in pro forma net income of $153.2 million, or $1.88 per diluted share for the year.
Investor Conference Call / Webcast Details
NYMEX will hold a conference call to discuss 2006 fourth-quarter and year-end results today, January 31, 2007 at 9:00 AM Eastern Time. Those wishing to participate in the conference call can dial (888) 211-1382 ( U.S. and Canada) or (706) 643-3090 (International), using the confirmation code ‘NMX’. A live audio webcast of the call will also be available on the Investor Relations section of NYMEX's 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.
