Financial Highlights (Q3 2007 vs. Q3 2006)
- Revenues of $20.1 million versus $19.9 million
- Net earnings up 17% - adjusted net earnings up 34%
- Adjusted net margin of 39% versus 30%
- Adjusted diluted earnings of $0.26 per share, up 18%
- Strong BOX contribution to Exchange earnings
- Strong financial position - cash of $119 million
NOTE TO EDITORS: ALL REFERENCES TO EARNINGS PER SHARE HAVE BEEN RESTATED
TO REFLECT THE THREE-FOR-ONE STOCK SPLIT THAT THE EXCHANGE EFFECTED ON
MARCH 15, 2007. ALL DOLLAR AMOUNTS IN THIS PRESS RELEASE ARE STATED IN
CANADIAN DOLLARS.
MONTREAL, Oct. 24 /CNW Telbec/ - Montreal Exchange Inc. (MX) (TSX: MXX) announced today its financial results for the third quarter ended September 30, 2007, including net earnings of $6.9 million, up 17% compared to the same period of 2006, or 34% on an adjusted basis.
Revenues for the third quarter 2007 amounted to $20.1 million compared to revenues of $19.9 million in the same period of 2006. This was due mainly to the 2% increase in the average daily volume to 161,516 contracts. The trading volumes in index derivatives and equity derivatives posted excellent growth of 32% and 26%, respectively. Trading conditions for the short-term interest rate contract, the BAX, have remained difficult, resulting in a 24% decline in activity for this contract, offset in part by a 16% increase in activity on the 10-year government of Canada bond futures contract, the CGB.
Expenses for the quarter amounted to $13.6 million compared with $12.6 million in the same period of 2006, including the payment of a non-recurring termination fee of $1.3 million to a service supplier, ATOS Euronext, following MX's decision to develop its own trading platform, SOLA(R). Excluding these charges, expenses declined 3% compared to the third quarter 2006.
The contribution from the Boston Options Exchange (BOX) to the MX's earnings amounted to $1.1 million for the quarter. This contribution is mainly attributable to the 69% increase in the BOX's average daily volume, which reached 591,159 contracts during the third quarter 2007 compared with 349,083 contracts for the same period of 2006.
Net earnings therefore amounted to $6.9 million, up 17% versus the $5.9 million in net earnings in the third quarter 2006, which translates into diluted earnings per share of $0.23, compared to $0.22 for the same period of 2006. Adjusted net earnings(1) totalled $7.9 million, up 34% to diluted earnings per share of $0.26 versus $0.22 for the corresponding periods.
According to Luc Bertrand, President and Chief Executive Officer of the Montreal Exchange, "BOX's strong performance on the U.S. equity options market during the quarter and MX's constant efforts to control expenses have made it possible for the Exchange to substantially increase its earnings and its margins."
"We are especially pleased with the strength of our index and equity derivatives as well as our CGB, which are posting sustained growth. In addition, our teams are keeping a close eye on changes in liquidity conditions currently affecting most of our short-term interest rate derivatives traded worldwide. The BAX is the Canadian product of reference for its class, and we are confident that it remains an important risk management tool for Canadian and foreign investors," reiterated Mr. Bertrand.
Highlights for third quarter activities
Increased ownership interest in BOX
The Exchange announced that it had begun negotiations to bring its
ownership interest in BOX from 31.4% to a maximum of 53.2%. It intends to
acquire the full 21.9% ownership interest in BOX held directly and
indirectly by the Boston Stock Exchange (BSE). This acquisition is
subject to the prior approval of the U.S. Securities and Exchange
Commission (SEC) in addition to the normal closing conditions.
Launching of carbon futures
The MX has taken a key step in launching the Montreal Climate Exchange
(MCeX) first Canadian carbon futures by submitting an application for
regulatory approval with the Autorite des marches financiers. This should
result in the negotiation of the first carbon futures in early 2008.
Creation of the Canadian Resources Exchange (CAREX)
The Montreal Exchange and NYMEX teams continued their efforts in the
third quarter to launch Canadian energy futures to be offered by CAREX in
2008.
Normal course issuer bid
During the third quarter 2007, the Montreal Exchange continued with its
normal course issuer bid to redeem and cancel 306,500 common shares for a
total consideration of $9.1 million. Since this program was implemented,
387,500 common shares were redeemed and cancelled, for a total of
$12.4 million. This normal course issuer bid enables the Exchange to
acquire up to 2,412,143 of its common shares for the period of March 27,
2007 to March 22, 2008.
Results for the nine-month period
Revenues rose 6% to $63.5 million for the nine-month period ended September 30, 2007. This result is largely attributable to the 9% increase in total volume compared to the same period of 2006.
Expenses amounted to $41.9 million for the nine-month period of 2007 compared with $39.6 million for the same period of 2006. Excluding non-recurring expenses, consisting primarily of the fees related to listing the MX's shares on March 27, 2007, total expenses for the first nine months of the year decreased 1% compared with the same period of 2006.
Net earnings were up 12% to $19.4 million for the period. Adjusted net earnings amounted to $22.5 million, up 22% compared to the same period of 2006. Adjusted diluted earnings per share amounted to $0.75 for the first nine months of 2007 compared to $0.67 a year earlier.
The Third Quarter 2007 Report is available on the MX website at www.m-x.ca and the SEDAR website at www.sedar.com.
(1): Non-GAAP Performance Measures
Adjusted net earnings and adjusted diluted earnings per share are financial measures not recognized by or calculated in accordance with Canadian generally accepted accounting principles. MX defines adjusted net earnings as net earnings excluding: a) charges (net of tax) relating to non-recurring professional fees in connection with the preparation of our non-offering prospectus and the listing of MX shares; and b) charges (net of tax) relating to legal settlements in connection with the closing of MX trading floor and c) early termination penalties (net of tax) on computer licence and maintenance agreements. For more information, please refer to the Management's Discussion and Analysis released today.
Investor / Media Conference Calls / Webcast Details
The Montreal Exchange will hold a conference call to review its third
quarter results on October 25 at 9:00 a.m. (Eastern). An investor
presentation will be available on the MX website at www.m-x.ca, in the
News section. Those wishing to participate in the conference call can
dial the following:
October 25 at 9:00 a.m.: Financial analysts' teleconference (followed
by a question period intended for the media).
In English: 514 868-1042
1-866-862-3927 (toll-free in North America)
In French: 514 861-0443
(simultaneous translation) 1-866-696-5911 (toll-free in North America)
Replay:
A replay will be available until Thursday,
November 1, 2007. To access the replay,
please dial 514 861-2272 or 1-800-408-3053.
For English,
enter passcode 3238432(number sign).
For French,
enter passcode 3238433(number sign).
This teleconference will be Webcast live and archived for 90 days on the
MX website: www.m-x.ca
About Montreal Exchange Inc.
The Montreal Exchange (MX) is Canada's financial derivatives exchange. The MX offers trading in Canadian interest rate, index and equity derivatives. Clearing, settlement and risk management services are provided by an AA rated clearing house, the Canadian Derivatives Clearing Corporation, fully owned by the MX. Our integrated trading and clearing services are supported by a proprietary suite of exchange technologies, known as SOLA(R). The MX also has interests in: the Boston Options Exchange (BOX), a U.S. automated equity options market, for which MX is the technical operator; the Canadian Resources Exchange (CAREX), a new corporation created with NYMEX that is dedicated to developing the Canadian energy market; and the Montreal Climate Exchange (MCeX), a joint venture with the Chicago Climate Exchange(R), aiming to establish the leading market for publicly traded environmental products in Canada. For more information about the Montreal Exchange, please visit www.m-x.ca.
Forward-Looking Statements
This press release contains forward-looking information within the meaning of the Quebec Securities Act and the Ontario Securities Act. Forward-looking information often contains terms such as "believe," "anticipate," "estimate," "plan," "expect," "intend," "may," "will" and similar expressions. This forward-looking information is based on current expectations, estimates, forecasts and projections about the industry in which we operate, as well as certain assumptions made by our management. Although we believe that the expectations and assumptions reflected in the forward-looking information are reasonable, forward-looking information involves known and unknown risks and uncertainties and is not a guarantee of future performance. Factors that could cause actual results to differ materially from those contemplated by this forward-looking information include, but are not limited to, risks associated with general market and economic conditions, evolving national and international competition, credit risks and clearing house risk, reliability of information systems and regulatory risks. We caution you that this list of factors is not exhaustive. The forward-looking information in this press release is subject to the risks identified in our periodic filings with the Canadian securities regulatory authorities. Given the uncertainty of forward-looking information, you are cautioned not to place undue reliance on this information. We disclaim any obligation to update any forward-looking information, except as may be required by applicable law.