U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”), a
boutique registered investment advisory firm with longstanding
experience in global markets and specialized sectors, today is
pleased to report financial results for the quarter ended
September 30, 2020. The previous quarter, ended June 30, 2020, was
a critical turning point in and validation of the Company’s
strategy to build its ETF presence through substantial and
unprecedented growth in the U.S. Global Jets ETF (JETS), along with
an exponential increase in daily trading volume and liquidity. The
growth in both JETS and the U.S. Global GO GOLD and Precious Metal
Miners ETF (GOAU) continued in the most recent quarter, which has
vastly improved the Company’s revenue, cash flow and profit
margins.
For the quarter ended September 30, 2020:
Total operating revenues of $3.2 million, an
increase of 73% from the previous quarter and up more than 300% the
same quarter from a year ago. This marks the Company’s best quarter
for revenues in the last six years.
Net income of $1.9 million, or $0.13 per share, an
increase of 30% from the previous quarter and up more than $5.5
million from the same period last year. This marks the Company’s
best quarter for earnings since the third fiscal quarter of
2011.
A surge in assets under management (AUM) quarter-over-quarter
and year-over-year. Average AUM were $2.0 billion, an increase
of 61% from the previous quarter and up nearly 290% from the same
quarter a year ago. This is the highest quarterly average AUM since
the second fiscal quarter of 2012, when average AUM was $2.1
billion.
Expanding operating margin to nearly 29%, compared to
operating losses for the previous quarter and for the same period a
year ago.
Higher revenues in the quarter ended September 30, 2020, were
mainly due to higher AUM in the Company’s two ETFs, GOAU and
JETS.
GOAU stood at $118.0 million, an increase of
approximately 37% quarter-over-quarter and 260% year-over-year.
JETS ended the quarter at $1.6 billion, up approximately
37% quarter-over-quarter and 3,200% year-over-year.
As of September 30, 2020, total AUM, including mutual funds and
ETF clients, was approximately $2.2 billion versus $498.0 million
as of September 30, 2019, an increase of $1.7 billion, or 350%.
U.S. Global Jets ETF (JETS) Exceeds 100 Million Shares
Outstanding
JETS continued to see healthy inflows during the quarter ended
September 30, 2020, as value investors sought exposure to
distressed airline stocks. The smart beta 2.0 ETF uses a dynamic,
systematic approach to both portfolio structure and securities
selection that recalibrates and rebalances every quarter. More than
$444.5 million in net new assets came into JETS during the
three-month period, bringing the airline ETF’s net assets up to
$1.6 billion. In early June of this year, JETS broke above $1
billion in assets for the first time since its debut in April 2015,
following a remarkable 70 straight trading days of positive
inflows. JETS hit another milestone on October 14 when it exceeded
100 million shares outstanding for the first time. This is
meaningful because it shows growing demand for the airlines ETF,
leading to the creation of new shares.
“We are thrilled and grateful to have seen demand for JETS
continue to surge in the months since airline share prices
plummeted more than 60% due to the pandemic,” comments Frank
Holmes, the Company’s CEO and chief investment officer. “The
domestic airline industry continues to recover from the worst
global health crisis in 100 years, which is positive for JETS. On
Sunday, October 18, the number of daily U.S. commercial air
passengers processed by airport security exceeded 1 million for the
first time since March 2020.
“We’re optimistic that airline bookings could recover even
further in the coming weeks, especially now that new research
appears to show that air travel may be far less risky than
initially thought,” Mr. Holmes continues. “According to the
Department of Defense (DoD), which researched the spread of
particles in airline cabins over a six-month period, mask-wearing
passengers are at ‘very low’ risk of being infected with the
coronavirus, even on a packed flight. That’s thanks not only
to the use of masks but also modern aircrafts’ superior air
filtration system.”
Constructive Quarter for Gold Mining Funds
The Company’s two gold mining mutual funds, the Gold and
Precious Metals Fund (USERX) and World Precious Minerals Fund
(UNWPX), and its gold ETF, the U.S. Global GO GOLD and Precious
Metal Miners ETF (GOAU), all saw higher average AUM in the quarter
ended September 30, 2020, compared to the same period a year ago.
The price of gold hit a new record high of $2,070 per ounce on
August 6 as unprecedented spending by governments around the world
raised the metal’s haven status. As a result, shares of gold mining
companies, as measured by the NYSE Arca Gold Miners Index, more
than doubled between the market bottom in mid-March to early
August.
For the quarter ended September 30, 2020, average AUM in USERX,
which invests mainly in senior metal producers, was $156.8 million,
an increase of $44.2 million from the same period last year.
Average AUM for UNWPX, which invests primarily in gold explorers,
grew $31.3 million, from $77.3 million to $108.6 million. GOAU
crossed above $100 million in assets for the first time in July
2020, helping the ETF get on additional trading platforms.
Global Luxury Goods Fund (USLUX), the Only U.S.-Based Luxury
Fund, Became Available in July
The Company is pleased that the Global Luxury Goods Fund (USLUX)
is now included in our line-up of mutual funds as of July 1, 2020,
providing investors access to companies around the world that are
involved in the design, manufacture and sale of products that are
not considered to be essential but are highly desired. As of this
writing, USLUX is the only U.S.-based mutual fund with a luxury
goods strategy.
“We’re very pleased with how well certain luxury stocks have
performed during the pandemic compared to the broader market,” says
Mr. Holmes. “With consumers cutting back on dining out and
traveling, apparel brands have an opportunity to capture more of
consumer’s discretionary budgets. Digital capabilities, product
innovation and a flexible supply chain remain incredibly important,
and another round of fiscal stimulus is expected to support
consumption.”
Adequate Liquidity and Capital Resources
As of September 30, 2020, the Company had net working capital of
approximately $9.3 million. With approximately $2.6 million in cash
and cash equivalents and $12.6 million in securities at fair value,
the Company has adequate liquidity to meet its current
obligations.
Share Repurchase Program
The Company has a share repurchase program, approved by the
Board of Directors, authorizing it to annually purchase up to $2.75
million of its outstanding common shares on the open market through
December 31, 2020. For the three months ended September 30, 2020,
the Company repurchased 1,000 class A shares using cash of $2,000.
The plan may be suspended or discontinued at any time.
GROW Continued Dividends
The Company has continued to pay monthly dividends since June
2007. The Board of Directors has authorized a monthly dividend of
$0.0025 per share through December 2020, at which time the Board of
Directors will consider continuation of the dividend. Based on the
closing price of $2.57 on October 30, 2020, the annualized dividend
yield is 1.17%. The total amount of cash dividends expected to be
paid to class A and class C shareholders from October to December
2020 is approximately $113,000.
Earnings Webcast Information
The Company has scheduled a webcast for 7:30 a.m. Central time
on Friday, November 6, 2020, to discuss the Company’s key financial
results for the year. Frank Holmes will be accompanied on the
webcast by Lisa Callicotte, chief financial officer, and Holly
Schoenfeldt, marketing and public relations manager. Click here to
register for the earnings webcast or visit www.usfunds.com for more
information.
Selected Financial Data (unaudited):
(dollars in thousands, except per share
data)
|
Three months
ended |
|
9/30/2020 |
9/30/2019 |
Operating Revenues |
$3,245 |
$804 |
Operating Expenses |
2,308 |
1,472 |
Operating Income (Loss) |
937 |
(668) |
|
|
|
Total Other Income (Loss) |
1,037 |
(3,035) |
Income (Loss) from Continuing Operations Before Income
Taxes |
1,974 |
(3,703) |
|
|
|
Income Tax Expense (Benefit) |
30 |
(224) |
Net Income (Loss) from Continuing Operations |
1,944 |
(3,479) |
Loss from Discontinued Operations |
- |
(136) |
Net Income (Loss) |
1,944 |
(3,615) |
Less: Net Loss Attributable to Non-Controlling Interest |
- |
(48) |
Net Income (Loss) Attributable to U.S. Global Investors,
Inc. |
$1,944 |
$(3,567) |
|
|
|
Income (Loss) from continuing operations per share (basic and
diluted) |
$0.13 |
($0.23) |
Loss from discontinued operations per share (basic and
diluted) |
- |
$(0.01) |
Net income (loss) per share (basic and diluted) |
$0.13 |
($0.24) |
|
|
|
Avg. common shares outstanding (basic) |
15,080,549 |
15,130,235 |
Avg. common shares outstanding (diluted) |
15,080,743 |
15,130,235 |
|
|
|
Avg. assets under management from continuing operations
(millions) |
$2,000.0 |
$513.8 |
####
About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back more than 50 years
when it began as an investment club. Today, U.S. Global Investors,
Inc. (www.usfunds.com) is a registered investment adviser that
focuses on niche markets around the world. Headquartered in San
Antonio, Texas, the Company provides money management and other
services to U.S. Global Investors Funds and U.S. Global ETFs.
Forward-Looking Statements and Disclosure
This news release and other statements by U.S. Global Investors
may include certain “forward-looking statements,” including
statements relating to revenues, expenses and expectations
regarding market conditions. You can identify these forward-looking
statements by the use of words such as “outlook,” “believes,”
“expects,” “potential,” “opportunity,” “seeks,” “anticipates” or
other comparable words. Such statements involve certain risks and
uncertainties and should be read with corporate filings and other
important information on the Company’s website, www.usfunds.com, or
the Securities and Exchange Commission’s website at
www.sec.gov.
These filings, such as the Company’s annual report and Form
10-Q, should be read in conjunction with the other cautionary
statements that are included in this release. Future events could
differ materially from those anticipated in such statements and
there can be no assurance that such statements will prove accurate
and actual results may vary. The Company undertakes no obligation
to publicly update or review any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
Please consider carefully a fund’s investment objectives, risks,
charges and expenses. For this and other important information,
obtain a fund prospectus by visiting www.usfunds.com. Read it
carefully before investing. Foreside Fund Services, LLC,
Distributor. U.S. Global Investors is the investment adviser.
JETS and GOAU are distributed by Quasar Distributors, LLC. U.S.
Global Investors is the investment adviser to JETS and GOAU.
Foreside Fund Services, LLC and Quasar Distributors, LLC are
affiliated.
Shares of any ETF are bought and sold at market price (not NAV),
may trade at a discount or premium to NAV and are not individually
redeemed from the funds. Brokerage commissions will reduce returns.
Stock markets can be volatile and share prices can fluctuate in
response to sector-related and other risks as described in the fund
prospectus. Foreign and emerging market investing involves special
risks such as currency fluctuation and less public disclosure, as
well as economic and political risk. Companies in the consumer
discretionary sector are subject to risks associated with
fluctuations in the performance of domestic and international
economies, interest rate changes, increased competition and
consumer confidence. Gold, precious metals, and precious minerals
funds may be susceptible to adverse economic, political or
regulatory developments due to concentrating in a single theme. The
prices of gold, precious metals, and precious minerals are subject
to substantial price fluctuations over short periods of time and
may be affected by unpredicted international monetary and political
policies. We suggest investing no more than 5% to 10% of your
portfolio in these sectors. The outbreak of the COVID-19 pandemic
and the resulting actions to control or slow the spread has had a
significant detrimental effect on the global and domestic
economies, financial markets and industries, including airlines.
U.S. Global Investors continues to monitor the impact of COVID-19,
but it is too early to determine the full impact this virus may
have on commercial aviation. Should this emerging macro-economic
risk continue for an extended period, there could be an adverse
material financial impact to the U.S. Global Jets ETF.
Smart beta defines a set of investment strategies that
emphasize the use of alternative index construction rules to
traditional market capitalization-based indices. Smart
beta emphasizes capturing investment factors or market
inefficiencies in a rules-based and transparent way.
The NYSE Arca Gold Miners Index is a modified market
capitalization weighted index comprised of publicly traded
companies involved primarily in the mining for gold and silver.
All opinions expressed and data provided are subject to change
without notice. Some of these opinions may not be appropriate to
every investor.
- JETS-100-million-shares
- TSA-1-million-passengers
Holly Schoenfeldt
U.S. Global Investors, Inc.
210.308.1268
hschoenfeldt@usfunds.com
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