U.S. Global Investors, Inc. (NASDAQ: GROW), a boutique registered
investment advisory firm with longstanding experience in global
markets and specialized sectors, today reported a net loss of
$513,000, or $(0.03) per share, on operating revenues of $6.8
million for the fiscal year ended June 30, 2017. In comparison, for
the previous fiscal year, U.S. Global Investors recorded a net loss
of $3.7 million, or $(0.24) per share, on operating revenues of
$5.5 million. The three factors that most impacted the reduction in
net loss were an increase in revenues due to higher average assets
under management, a decrease in compensation expense due to fewer
employees, and lower general and administrative expenses than the
previous year, partly due to one-time transition costs in the prior
year.
The operating revenue of $6.8 million for fiscal year 2017 was a
23 percent increase over the prior year, when the company reported
operating revenue of $5.5 million. This increase was mainly due to
an increase in assets under management due to market appreciation
in the gold funds. In addition, operating expenses decreased 21
percent year-over-year. Operating expenses for fiscal year 2017
were $7.6 million compared to $9.7 million for fiscal year 2016.
The decrease in expenses is primarily due to outsourcing of certain
functions to other providers, resulting in fewer employees, as well
as nonrecurring transition costs included in the prior year’s
expenses.
Average assets under management for the fiscal year ended June
30, 2017 were $843 million compared to $744 million for the fiscal
year ended June 30, 2016, an increase of 13 percent. As of June 30,
2017, total assets under management were $760 million, compared to
$883 million as of June 30, 2016.
The company estimates that it would have needed an additional
$55 million in equity funds to break even for the year.
Strategy for Growth in Disruptive Markets
Frank Holmes, CEO and chief investment officer of U.S. Global
Investors, comments, “Average assets under management in our gold
funds, a key driver of the company’s revenue, increased
substantially over the last fiscal year. However, gold began to
stall beginning in the fall of 2016, as investors awaited the
results of the U.S. presidential election and the Federal Reserve
started raising rates.”
Holmes continues, “Our gold and natural resources funds were
affected by external events March through June of 2017. A major
disruption occurred when the largest junior gold miner ETF
reorganized its index methodology, triggering a wave of price
weakness throughout the junior gold mining stocks universe. The
ETF’s holdings in many of the junior miners were approaching 20
percent of the mining companies’ outstanding shares, so the ETF
managers chose to downsize the ETF’s weights in existing holdings
and reinvest the proceeds in more mid-tiered gold producers. The
collateral damage of this $3 billion trade was felt throughout
small- and mid-cap resource companies globally, including our gold
and resource funds.”
Holmes also comments, “I believe that with every negative event,
there is also an opportunity for a positive. We are thrilled that
we were able to bring our latest gold ETF to the marketplace. The
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) launched
in June, allowing us to bring our longstanding expertise in gold
mining investment to an ETF product. Thousands of hours of research
went into developing the robust, per share fundamental factors that
shape the quantamental methodology of our U.S. Global GO GOLD and
Precious Metal Miners Index (GOAUX). I encourage you to visit
http://www.usglobalindex.com/ to view how this quantamental
approach outperforms a gold index that is based on market
capitalization alone.”
Continued Strong Balance Sheet
As of June 30, 2017, the Company had net working capital of
approximately $16.3 million. Cash and cash equivalents totaled $4.0
million, and marketable securities totaled $13.1 million as of the
end of the quarter. In addition, the Company has had no long-term
debt since 2004 and owns its headquarters building.
U.S. Global Continues GROW Dividends
The Company has also continued to pay monthly dividends for more
than 10 years. A monthly dividend of $0.0025 per share is
authorized through September 2017. The latest record date was
September 11, and the payment date will be September 25. The
continuation of future cash dividends will be reviewed by the board
of directors quarterly.
Share Repurchase Program
U.S. Global Investors has continued purchasing its outstanding
stock. For the three months ended June 30, 2017, the Company
repurchased 12,205 class A shares using cash of $17,000. The share
repurchase plan was renewed for calendar year 2017 but may be
suspended or discontinued at any time. Frank Holmes is purchasing
shares pursuant to a Rule 10b-18 plan along with the Company
repurchase program.
Earnings Webcast Information
The Company has scheduled a webcast for 4:00 p.m. Central time
on Tuesday, September 12, 2017, to discuss the Company’s key
financial results for the quarter. Frank Holmes will be accompanied
on the webcast by Susan McGee, president, general counsel and chief
compliance officer; and Lisa Callicotte, chief financial officer.
Click here to register for the earnings webcast or visit
www.usfunds.com for more information.
Selected financial data for fiscal year:
(dollars in thousands, except per share data)
|
2017 |
2016 |
Operating Revenues |
$6,763 |
$5,505 |
Operating Expenses |
7,636 |
9,681 |
Operating Loss |
(873) |
(4,176) |
Total Other Income |
346 |
485 |
Income Tax Expense
(Benefit) |
17 |
(6) |
Loss from Continuing
Operations |
(544)
- |
(3,685)
(18) |
Loss from Discontinued
Operations, Net of $0 Tax Benefit of Distributor |
Net Loss |
(544)
(31) |
(3,703)
(28) |
Less: Net Loss
Attributable to Non-Controlling Interest |
Net Loss Attributable
to U.S. Global Investors |
$(513) |
$(3,675) |
Loss per share (basic
and diluted) |
$(0.03) |
$(0.24) |
|
|
|
Avg. common shares
outstanding (basic) |
15,212,008 |
15,294,893 |
Avg. common shares
outstanding (diluted) |
15,212,008 |
15,294,893 |
|
|
|
Avg. assets under
management (millions) |
$843 |
$744 |
####
About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back more than 40 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, U.S. Global ETFs and other
international clients.
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-K, 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.
Attachments:
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/509b4e2c-7bc5-4b5b-b9b8-613f828acd4b
Lisa Aston
U.S. Global Investors, Inc.
210.308.1222
laston@usfunds.com
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