NYMEX Holdings, Inc. (NYSE: NMX), parent company of the New York Mercantile Exchange, Inc. (NYMEX), today reported that total operating revenues for the fourth quarter ended December 31, 2007 rose 38% to a record $172.6 million compared to $124.8 million for the fourth quarter 2006. Net income for the fourth quarter 2007 increased 50% to a record $63.5 million compared to $42.3 million for the fourth quarter 2006. Diluted earnings per share for the fourth quarter 2007 were $0.67, based on 94.9 million shares outstanding, compared to $0.48, for the fourth quarter 2006 based on 87.6 million shares outstanding.
For the year ended December 31, 2007, NYMEX reported record total operating revenues of $673.6 million, a 35% increase from $497.2 million for 2006. Net income rose 45% to $224.0 million versus $154.8 million in 2006. Excluding the one-time charge related to Optionable, Inc., in the second quarter of 2007, net income increased 54% to $238.8 million for the full year. Diluted earnings per share were $2.36 versus $1.90 in 2006, based on 94.9 million and 81.5 million shares outstanding, respectively. Excluding the one- time charge, diluted earnings per share for the full year was $2.52.
The Board of Directors approved a regular quarterly dividend of 10 cents per share to shareholders of record as of March 3, 2008, payable on March 28, 2008.
NYMEX Chairman Richard Schaeffer said, "We delivered a strong year of operating performance and profitability as we continued to execute on our strategic goals. Throughout the year we delivered dramatic volume growth through the successful adoption of electronic trading of our markets, while also expanding into new markets and establishing important alliances, such as the launch of our leading Dubai Mercantile Exchange (DME) joint venture in June. Our recent purchase of 15% stake in Imarex ASA, a leading Norwegian freight derivatives exchange, represents an important expansion into the substantial European derivatives market. In addition, we are proud of our leadership in creating The Green Exchange venture, which we expect will become the primary exchange for environmental markets contracts. We remain focused on expanding our distribution internationally, developing innovative product offerings and new ventures, and continuing to deliver profitable growth to shareholders."
NYMEX President and Chief Executive Officer James E. Newsome stated, "We improved profitability in 2007 through our expense reduction program and achieved a record 71% pre-tax margin for the fourth quarter and 65% pre-tax margin for the year. NYMEX continued to set multiple single-day electronic trading volume records on the CME Globex® electronic trading platform, as well as numerous volume and open interest records in our benchmark contracts. Our product innovation continues to lead the industry with the listing of electronic options on futures, carbon emissions, uranium, catastrophe risk futures, and the growing Oman Sour Crude contract, which now dominates Middle Eastern crude oil volume and open interest."
Fourth Quarter Results
Clearing and transaction fees rose 38% for the fourth quarter 2007 to $144.9 million compared to $104.8 million for the year ago period. Market data fees increased 50% for the fourth quarter 2007 to $24.6 million versus $16.4 million for the fourth quarter 2006.
Average daily volume was 1.539 million contracts during the fourth quarter 2007, a 28% increase over the fourth quarter 2006. NYMEX electronic trading volume on CME Globex averaged 703,673 contracts per day and represented a 91% increase over fourth quarter 2006 electronic trading volume. NYMEX floor-traded energy futures and options averaged 228,678 contracts a day for the fourth quarter 2007 versus 362,259 contracts per day for the same period of 2006. COMEX electronic trading volume on CME Globex averaged 147,017 contracts per day, an increase of 808% over fourth quarter 2006 average daily electronic trading volume of 16,197 contracts.
NYMEX launched side-by-side trading of physically delivered futures for its COMEX division metals on CME Globex during open outcry hours on December 3, 2006. COMEX metals open outcry average daily volume was 42,095 contracts for the fourth quarter 2007 versus 75,790 contracts per day for the same period in 2006. Average daily volume on NYMEX ClearPort was 310,175 contracts in the fourth quarter 2007 as compared to 301,994 contracts in the same period of 2006. The remaining average daily volume of 107,400 contracts per day consisted of other transactions, which include position transfers and exchanges.
Total operating expenses, excluding direct transaction costs of $23.7 million, were $40.6 million for the fourth quarter 2007 compared to $38.5 million for the same period in 2006. Results for the fourth quarter 2007 included an additional $1.4 million of severance related to the Company's enterprise efficiency plan announced on November 1, 2007, while expenses in the fourth quarter 2006 were below their normal run-rate due to year-end adjustments of bonuses and other accruals.
Income before provision for income taxes was $110.6 million for the fourth quarter 2007 compared to $72.5 million for the fourth quarter 2006. Pre-tax 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 71% in the fourth quarter 2007 compared to 64% in fourth quarter 2006.
Full Year 2007 Results
Clearing and transaction fees rose 35% for the year ended December 31, 2007 to $565.8 million compared to $419.7 million in 2006. Market data fees were $96.0 million for 2007 versus $63.6 million in 2006, an increase of 51%.
Average daily volume for 2007 was 1.485 million contracts, a 25% increase over 2006. NYMEX electronic trading volume on CME Globex averaged 649,552 contracts per day which represented a 234% increase over 2006 electronic trading volume. NYMEX floor-traded energy futures and options averaged 260,160 contracts a day in 2007. COMEX electronic trading volume on CME Globex averaged 113,509 contracts per day, an increase of 755% over 2006 average daily electronic trading volume. COMEX metals open outcry average daily volume was 43,852 contracts a day in 2007. Average daily volume on NYMEX ClearPort was 335,460 contracts in 2007, up from 313,953 contracts in 2006. The remaining average daily volume of 82,226 per day consisted of other transactions, which include position transfers and exchanges.
Total operating expenses for 2007, excluding direct transaction costs of $96.8 million, decreased to $167.2 million versus $174.4 million in 2006, driven primarily by the Company's cost cutting initiatives.
Income before provision for income taxes was $394.8 million for 2007 compared to $278.9 million in 2006. Excluding the one-time charge, income before provision for income taxes was $420.7 million. Pre-tax margin was 65% in 2007 compared to 60% in 2006. Excluding the one-time charge, pre-tax margin in 2007 was 70%.
For the full year 2007, the Company declared dividends totaling $128.4 million, or $1.36 per common share, which included a special, one-time dividend per share of $1.05.
Investor Conference Call / Webcast Details
NYMEX will hold a conference call to discuss 2007 fourth quarter and full year results today, February 1, 2008 at 8:00 AM Eastern Time. Those wishing to participate in the conference call can dial (888) 396-2369 (U.S. and Canada) or (617) 847-8710 (International) using the confirmation code 15861611. 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/. An archived version of the conference call will 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., the world's largest physical commodities exchange, offering futures and options trading in energy and metals contracts and clearing services for more than 350 off-exchange 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, emissions, and soft commodities contracts for trading and clearing virtually 24 hours each 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/.
Tables Follow:
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
Three Months Ended Year Ended
December 31, December 31,
Operating Revenues 2007 2006 2007 2006
(Audited)
Clearing and
transaction fees $144,930 $104,765 $565,756 $419,731
Market data fees 24,559 16,416 95,951 63,637
Other, net 3,092 3,589 11,897 13,881
Total operating
revenues 172,581 124,770 673,604 497,249
Operating Expenses
Direct transaction
costs 23,737 18,160 96,842 49,742
Salaries and employee
benefits 20,609 16,726 81,660 76,772
Occupancy and
equipment 5,648 5,788 22,501 28,255
Depreciation and
amortization, net of
deferred credit
amortization 3,359 3,597 13,776 15,167
General and
administrative 4,980 4,471 19,212 19,670
Professional services 3,044 3,729 16,311 14,540
Telecommunications 1,364 1,350 5,740 6,104
Marketing 1,175 1,019 5,573 5,439
Other expenses 400 1,785 2,463 8,501
Total operating
expenses 64,316 56,625 264,078 224,190
Operating income 108,265 68,145 409,526 273,059
Non-Operating Income and
Expenses
Investment income, net 5,634 7,129 23,347 12,879
Interest income from
securities lending 11,460 32,270 91,908 130,184
Interest expense/fees
from securities
lending (10,367) (31,819) (88,203) (127,254)
Interest expense (1,586) (1,620) (6,425) (6,620)
Losses from
unconsolidated
investments (2,764) (1,561) (35,371) (3,329)
Total
non-operating
income and
expenses 2,377 4,399 (14,744) 5,860
Income before
provision for income
taxes 110,642 72,544 394,782 278,919
Provision for income
taxes 47,142 30,233 170,743 124,118
Net income $63,500 $42,311 $224,039 $154,801
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 $0.67 $0.48 $2.37 $1.90
Diluted $0.67 $0.48 $2.36 $1.90
Weighted Average Number
of Common Shares
Outstanding
Basic 94,594,000 87,603,000 94,489,000 81,504,000
Diluted 94,925,000 87,603,000 94,856,000 81,504,000
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
December 31, December 31,
Assets 2007 2006
Cash and cash equivalents $3,296 $18,631
Collateral from securities
lending program 847,581 2,547,312
Marketable securities, at market
value 461,582 485,581
Clearing and transaction fees
receivable, net of allowance for
member credits 38,443 32,853
Prepaid expenses 8,786 7,009
Margin deposits and guaranty
funds 170,192 17,052
Other current assets 29,113 10,238
Total current assets 1,558,993 3,118,676
Property and equipment, net 176,471 183,193
Goodwill and indefinite-lived
intangible asset 307,125 307,125
Long-term investments 178,036 3,008
Other assets 7,121 11,929
Total assets $2,227,746 $3,623,931
Liabilities and
Stockholders' Equity
Accounts payable and accrued
liabilities $15,723 $14,854
Accrued salaries and related
liabilities 17,107 13,688
Payable under securities lending
program 847,581 2,547,312
Margin deposits and guaranty
funds 170,192 17,052
Income tax payable - 4,984
Other current liabilities 31,122 35,019
Total current liabilities 1,081,725 2,632,909
Grant for building construction
deferred credit 104,021 106,166
Long-term debt 77,464 80,281
Retirement obligation 12,038 12,367
Other liabilities 23,962 17,286
Total liabilities 1,299,210 2,849,009
Total stockholders'
equity 928,536 774,922
Total liabilities and
stockholders' equity $2,227,746 $3,623,931
Non-GAAP Reconciliation
The Company evaluates its financial performance using various measures.
One measure is to exclude one-time gains and losses from its results to
arrive at a pro forma earnings per share amount. Pro forma earnings per
share is a non-GAAP (generally accepted accounting principles)
performance measure, however, the Company believes that it is useful to
assist investors in gaining an understanding of the trends and operating
results of the Company's business. Pro forma earnings per share should
be viewed in addition to, and not in lieu of, the Company's reported
results under U.S. GAAP.
During the second quarter of 2007, the Company recorded a one-time charge
related to its investment in Optionable, Inc. of approximately $26.0
million that was recorded in losses from unconsolidated investments under
the caption "Non-Operating Income and Expenses" on its consolidated
statements of income. The following is a reconciliation of U.S. GAAP
results to pro forma results for the periods presented:
(in thousands, except share amounts)
Three Months Ended Year Ended
December 31, 2007 December 31, 2007
Net income $63,500 $224,039
Add: Impairment loss on
investment in Optionable - 25,962
Less: Effective tax rate benefit
of impairment loss on
investment in Optionable - 11,229
Pro forma net income $63,500 $238,772
Earnings per common share on net
income:
Basic $0.67 $2.37
Diluted $0.67 $2.36
Pro forma earnings per common share
on pro forma net income:
Pro forma basic $0.67 $2.53
Pro forma diluted $0.67 $2.52
Weighted average common shares
outstanding:
Basic 94,594,000 94,489,000
Diluted 94,925,000 94,856,000
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006
Trading Days 64 63 63 61 62
Average Daily Volume (round turns, in thousands, difference is due to
rounding)
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006
NYMEX Floor 229 229 257 330 362
NYMEX Electronic 704 687 608 597 368
COMEX Floor 42 36 42 56 76
COMEX Electronic 147 114 101 90 16
NYMEX ClearPort 310 351 309 373 302
Other 107 74 79 68 75
Total 1,539 1,491 1,396 1,513 1,199
Gross Clearing and Transaction Revenue (in thousands)
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006
NYMEX Floor $21,517 $20,824 $19,966 $23,664 $24,497
NYMEX Electronic 54,243 54,285 50,520 43,271 24,953
COMEX Floor 3,948 3,072 3,249 4,244 5,795
COMEX Electronic 14,572 10,786 9,791 8,253 2,000
NYMEX ClearPort 38,217 46,905 44,281 49,609 38,837
Other 12,433 9,387 9,583 9,136 8,683
Total $144,930 $145,259 $137,390 $138,177 $104,765
Net Rates Per Contract
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006
NYMEX Floor $1.47 $1.45 $1.23 $1.18 $1.10
NYMEX Electronic 0.92 0.97 1.02 0.89 0.70
COMEX Floor 1.46 1.34 1.24 1.25 1.23
COMEX Electronic 1.26 1.16 1.19 1.20 1.99
NYMEX ClearPort 1.51 1.67 1.72 1.66 1.58
Other 1.81 2.02 1.92 2.19 1.88
Total Net RPC 1.23 1.28 1.29 1.24 1.17
Direct Cost 0.24 0.27 0.28 0.26 0.24
Gross RPC $1.47 $1.55 $1.56 $1.50 $1.41
SOURCE: NYMEX Holdings, Inc.
