Nymex Holdings Inc., parent company of the New York Mercantile Exchange Inc. (Nymex), this week posted record net income for the first quarter of $56.2 million, an increase of 67% over the $33.6 million that the company posted during 1Q2006. The quarter also revealed that electronic trading continues to gain volume while floor trading gets lighter and lighter.
For 1Q2007, Nymex recorded diluted earnings per share of $0.59, based on 94.8 million shares outstanding, compared to $0.44, based on 75.1 million shares outstanding, for the first quarter of 2006. Total operating revenues for the first quarter rose 47% to $164.2 million compared to $111.7 million for the first quarter of 2006. The exchange also announced that the board of directors approved a quarterly dividend of 10 cents per share on the company's common stock to shareholders of record as of the close of business on June 1, and payable on June 29.
"We continue to execute on the aggressive goals we have set since our public offering," said Richard Schaeffer, Nymex chairman. "During the first quarter, we set volume, revenue, net income and profitability records, resulting in tremendous quarterly performance. Our electronic volumes on the industry-leading CME Globex electronic trading platform hit all-time highs, and we have taken back market share in our energy and metals products."
While Nymex's 1Q results were stellar, the battle for commodity exchange supremacy continues as IntercontinentalExchange (ICE) also posted record earnings for the quarter. ICE nearly tripled its net income to $55.6 million for 1Q2007, an increase in quarterly earnings of 183% compared to $19.7 million in net income recorded for 1Q2006 (see related story).
Much like its chef rival, Nymex, which had a very successful initial public offering in November 2006, has also been busy on the acquisition front. Following the IPO (see Daily GPI, Nov. 20, 2006), where stock prices more than doubled on their first day of trading on the New York Stock Exchange, Nymex acquired investment positions in two companies (see Daily GPI, March 26; April 13).
"Since January, we have announced and completed important transactions, including a 19% investment in Optionable Inc. to enhance our options offering; and a 10% investment in Montreal Exchange Inc., with which we are jointly creating the Canadian Resources Exchange (CAREX) to serve the vast Canadian energy marketplace," said Schaeffer. "We also announced an increase in Nymex member transaction fees, which will improve our profitability while maintaining our status as the most aggressively priced market in our industry. We will continue to look at additional acquisitions and strategic investments. Our focus remains on diversification and on expanding the Nymex brand globally into untapped and underserved markets."
Clearing and transaction fees rose 50% for the first quarter 2007 to $138.2 million compared to $92.4 million for the year-ago period. Market data fees were $23.1 million for the first quarter of 2007, versus $15.4 million for the first quarter of 2006, an increase of 50%.
Average daily volume was 1.513 million contracts during the first quarter of 2007, a 40% increase over the first quarter of 2006. Nymex electronic volume on CME Globex was an average of 597,000 contracts per day and represented a 485% increase over first quarter 2006 electronic volume. With the surge in electronic trading, Nymex floor-traded energy futures and options averaged 330,000 contracts a day, a decrease of 39% from the first quarter of 2006.
"Nymex continues to be the global leader and innovator in the energy and metals markets," said Nymex CEO James E. Newsome. "In the first quarter, we introduced a number of significant new products in response to demand by our customer base, such as uranium, catastrophe risk and alternative energy futures. We are pleased by the progress we have made in improving our profitability and in increasing electronic volume on CME Globex and our Nymex ClearPort trading and clearing platforms."
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