U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”), a
registered investment advisory firm with longstanding experience in
global markets and specialized sectors from gold mining to
cryptocurrencies, today is pleased to report financial results for
the fiscal quarter ended September 30, 2021.
For the three-month period, total operating revenues were $6.5
million, an increase of over 100% year-over-year (YoY). Net income
for the quarter was $2.4 million, or $0.16 per share, an increase
of 23% YoY. Average assets under management (AUM) for the
three-month period ended September 30, 2021, were $4.0 billion,
twice as much as the same period last year. Operating margin for
the quarter was 44%, compared to 29% for the quarter ended
September 30, 2020.
“I’m thrilled that U.S. Global Investors has remained a go-to
fund shop for investors seeking strategic exposure to thematic
sectors such as airlines, gold mining, luxury goods and crypto
mining,” says Frank Holmes, CEO and Chief Investment Officer.
“Later this month, we’ll be able to add shipping and cargo to that
list when the U.S. Global Sea-to-Sky Cargo ETF, ticker SEA, begins
trading. We’re excited to include this offering in our growing
stable of innovative, quant-based exchange-traded funds, which also
includes the U.S. Global Jets ETF (JETS) and U.S. Global GO GOLD
and Precious Metal Miners ETF (GOAU).”
U.S. Global Investors Is Deeply Undervalued Relative to
Peers
Management and the Company’s Board of Directors are reviewing
strategies to unlock the deep value of the stock moving into 2022.
“The ETF business continues to grow exponentially. I invite
shareholders to explore the simple comparison table , showing GROW
relative to other investment advisors of various sizes, that are
also in the ETF space. Based on relative comparisons, I believe
U.S. Global looks not only deeply undervalued, but also very
attractive on a variety of metrics. I look forward to explaining in
greater detail during our webcast on January 12,” explains Mr.
Holmes.
JETS Trading Volume Has Remained Strong Despite New
Variant
JETS continued to attract assets, ending the September quarter
with $3.7 billion, an increase of more than 125% compared to the
same quarter end in 2020. Despite concerns of new coronavirus
variants disrupting commercial air travel, JETS trading volume has
been strong. On December 6, 2021, the airlines ETF saw a new daily
record in volume, with more than 33 million shares traded,
representing over $716 million in value.
The Company remains optimistic that a full airline industry
recovery can still take place in 2022, and a new forecast by
Airlines for America (A4A) appears to support this. According to
its most recent report, the U.S. trade group says it believes
airline revenues could fully recover to 2019 levels by the second
half of 2022. This projection is based largely on monthly sales
data from the seven largest U.S. carriers. By the September quarter
of 2022, ticket sales could be 3% above pre-pandemic levels, A4A
believes.
“In the meantime, airlines continue to offset still-recovering
ticket sales, not to mention higher fuel costs, with ancillary
revenues,” explains Mr. Holmes. “Such revenues include sales of
services that go beyond simply transporting someone from A to B.
Think frequent flyer programs, credit card applications, hotel
bookings, extra legroom and the like.”
As expected, ancillary revenues dipped dramatically in 2020, but
like the airlines industry as a whole, ancillary revenues appear to
have ticked up in 2021, as of November. According to IdeaWorks and
CarTrawler, global ancillary fees are estimated to increase to
$65.8 billion in 2021, or $7.7 billion more than last year.
Although ancillary revenues are still below 2019 levels, today
they represent a larger share of total airline revenues than they
did two years ago. In 2021, these fees represented an estimated
14.4% of total revenues, compared to 12.2% in 2019. A decade ago,
they represented only 5.4% of global sales, underscoring just how
important this revenue stream has become and will continue to
be.
Gold Could Be the Ultimate Contrarian Investment Right
Now
Compared to JETS, attracting new fund flows into GOAU has been
more challenging. Nevertheless, the Company maintains its bullish
position on the gold mining industry heading into 2022, especially
as inflation in economies around the world has touched multi-year
highs.
“Right now, gold is extremely unloved, making it, I believe, the
ultimate contrarian asset to own,” comments Mr. Holmes. “A number
of gold mining stocks also look very attractive at the moment, with
many of them generating remarkably higher free cash flow (FCF)
yield than the industry as a whole and the S&P 500. This number
tells you how well a company can meet its financial obligations,
pay down its debts and potentially raise dividends. There are quite
a few gold producers that had exceptionally strong cash positions
relative to the broader market, and we owned a number of them in
the quarter ended September 30, 2021, either in GOAU, the Gold and
Precious Metals Fund (USERX) and/or the World Precious Minerals
Fund (UNWPX).”
Luxury Goods Fund Continued to Outperform
The Company continues to be pleased with the performance of the
Global Luxury Goods Fund (USLUX), the only luxury-focused mutual
fund in North America. For the 12-month period through September
30, USLUX beat its benchmark, the S&P Composite 1500, after
fees, by more than 750 basis points, on impressive revenue
generated by many of the fund’s top holdings. Those include
recognizable super luxury names such as Christian Dior; Hermes;
Burberry; Ferrari; and LVMH, which posted a record 28.7 billion
euros ($34.0 billion USD) in revenue in the first half of 2021.
“USLUX became available in July 2020 after we changed its name
and investment strategy, and since then, it’s done better than even
I imagined. After plunging due to the global health crisis, the
personal luxury goods market returned to pre-pandemic growth in
2021, with sales estimated to top 283 billion euros ($325 billion
USD) by year-end, according to a recent report by Bain &
Company. That would represent a slight increase from then-record
sales of 281 billion euros ($318 billion) in 2019.”
SEA to Set Sail in January
The Company is excited to announce that, after some unexpected
delays, the U.S. Global Sea-to-Sky Cargo ETF (SEA) is set to launch
in January 2022. SEA will seek to provide diversified access to the
global sea shipping and air freight industries. Consisting of
common stocks listed on developed and emerging market exchanges
across the globe, the ETF will use a smart-beta strategy to
determine the most efficient sea shipping and air freight companies
in the world.
“After years of boom-and-bust cycles, container shipping
companies today appear to have benefited greatly from favorable
pricing power,” Mr. Holmes says. “At the same time that global
demand has rocketed back to pre-pandemic levels much sooner than
anticipated, shipping companies have exercised capacity growth
restraint, as too many vessels and routes could oversaturate the
market. Consequently, shipping rates have remained elevated near
record highs.”
An Exciting Quarter for HIVE Blockchain
Technologies
The Company’s principal exposure to the burgeoning crypto-mining
industry remains HIVE Blockchain Technologies Ltd. (“HIVE”), which
mines Bitcoin and Ether in facilities in Iceland, Sweden and
Canada. Investments in HIVE, including warrants and convertible
debentures, were valued at $23.2 million as of September 30,
2021.
“HIVE’s September quarter was highly eventful, right on the
heels of its long-awaited Nasdaq listing in June,” comments Mr.
Holmes. “HIVE added three brilliant new members to our leadership
team: Aydin Kilic in the role of President and Chief Operating
Officer; Johanna Thornblad, Sweden Country President; and Diana
Biggs, member of the HIVE Switzerland Board of Directors. In
September HIVE mined its 1,000th Bitcoin, an incredibly exciting
milestone. Construction at our campus in New Brunswick, Canada, is
in full throttle, the expansion of which will enable HIVE to deploy
an additional 20 megawatts (MW) of green and clean Bitcoin mining
capacity, with an additional 20MW scheduled to come online within
the first quarter of calendar 2022.”
HIVE had a record-breaking quarter for the period ended
September 30, 2021. Revenue rose to $52.6 million, up 41% compared
to the previous quarter, and 305% compared to the same quarter last
year. Net income was $59.8 million, an increase of 342% from
last quarter, and 549% since the prior year. HIVE ended the
September quarter holding 1,116 Bitcoin worth $48.4 Million and
25,154 Ether worth $74.7 Million.
Adequate Liquidity and Capital Resources
As of September 30, 2021, the Company had net working capital of
approximately $26.7 million, an increase of $5.1 million, or 23.5%
since June 30, 2021. With approximately $19.8 million in cash and
cash equivalents, an increase of $5.3 million, or 36.8%, since the
previous quarter, and $7.6 million in securities recorded at fair
value, excluding convertible securities and warrants, 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, 2022. The repurchase program has been in place since
December 2012. For the three months ended September 30, 2021, the
Company repurchased 13,647 class A shares using cash of
$82,000.
GROW Dividends
The Company’s Board of Directors has authorized a monthly
dividend of $0.0075 per share through March 2022, at which time it
will be considered for continuation by the Board. The total amount
of cash dividends expected to be paid to class A and class C
shareholders from October to March 2022 is approximately $676,000.
Payment of cash dividends is within the discretion of the Board and
is dependent on earnings, operations, capital requirements, the
Company’s general financial condition of the Company and general
business conditions.
Earnings Webcast Information
The Company has scheduled a webcast for 7:30 a.m. Central time
on Wednesday, January 12, 2022, 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 |
|
9/30/2021 |
9/30/2020 |
Operating Revenues |
$6,521 |
$3,245 |
Operating Expenses |
3,654 |
2,308 |
Operating Income |
2,867 |
937 |
|
|
|
Total Other Income |
37 |
1,037 |
Income Before Income Taxes |
2,904 |
1,974 |
|
|
|
Income Tax Expense |
514 |
30 |
Net Income |
$2,390 |
$1,944 |
|
|
|
Net income per share (basic and diluted) |
$0.16 |
$0.13 |
|
|
|
Avg. common shares outstanding (basic) |
15,030,115 |
15,080,549 |
Avg. common shares outstanding (diluted) |
15,031,199 |
15,080,743 |
|
|
|
Avg. assets under management from continuing operations
(billions) |
$4.0 |
$2.0 |
####
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. U.S. Global mutual funds are
distributed by Foreside Fund Services, LLC, Distributor. U.S.
Global Investors is the investment adviser.
Total Annualized Returns as of 9/30/2021:
Fund |
One-Year |
Five-Year |
Ten-Year |
Gross Expense Ratio |
Global Luxury Goods Fund |
38.91% |
12.59% |
10.56% |
1.58% |
S&P Composite 1500 Index |
31.38% |
16.55% |
16.49% |
n/a |
Performance data quoted above is historical. Past performance is
no guarantee of future results. Results reflect the reinvestment of
dividends and other earnings. For a portion of periods, the fund
had expense limitations, without which returns would have been
lower. Current performance may be higher or lower than the
performance data quoted. The principal value and investment return
of an investment will fluctuate so that your shares, when redeemed,
may be worth more or less than their original cost. Performance
does not include the effect of any direct fees described in the
fund’s prospectus which, if applicable, would lower your total
returns. Performance quoted for periods of one year or less is
cumulative and not annualized. Obtain performance data current to
the most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
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.
All opinions expressed and data provided are subject to change
without notice. Some of these opinions may not be appropriate to
every investor.
A smart-beta ETF is a type of exchange-traded fund
that uses a rules-based system for selecting investments to be
included in the fund. A basis point is one hundredth of a percent
or equivalently one percent of one percent or one ten
thousandth. The S&P 500 Index is a stock market index
tracking the performance of 500 large companies listed on stock
exchanges in the United States. The S&P Composite 1500 combines
three leading indices, the S&P 500, the S&P MidCap 400 and
the S&P SmallCap 600, to cover approximately 90% of U.S. market
capitalization. Mutual fund investing involves risk. Principal loss
is possible. 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. The performance of
such companies may also be affected by factors relating to levels
of disposable household income, reduced consumer spending, changing
demographics and consumer tastes, among others. Cryptocurrency
markets and related securities have been, and are expected to
continue to be, volatile. There has been significant volatility in
the market price of HIVE, which has materially impacted the value
of the investments included on the balance sheet, unrealized gain
recognized in investment income (loss), and unrealized gain
recognized in other comprehensive income (loss). The investments
did not represent ownership in HIVE as of September 30, 2021, or
June 30, 2021. The securities are subject to Canadian securities
regulations. Frank Holmes serves on the board as non-executive
chairman of HIVE and held shares and options at September 30, 2021.
Effective August 31, 2018, Mr. Holmes was named Interim Executive
Chairman of HIVE while a search for a new CEO is undertaken.
Fund portfolios are actively managed, and holdings may change
daily. Holdings are not recommendations to buy or sell a security
and are reported as of the most recent quarter-end. Holdings in the
Global Luxury Goods Fund, Gold and Precious Metals Fund and World
Precious Minerals Fund as a percentage of net assets as of
9/30/2021: Christian Dior SE (4.82% in Global Luxury Goods Fund,
0.00% in Gold and Precious Metals Fund, 0.00% in World
Precious Minerals Fund), Hermes International (4.75% in Global
Luxury Goods Fund, 0.00% in Gold and Precious Metals Fund,
0.00% in World Precious Minerals Fund), Burberry Group PLC
(1.47% in Global Luxury Goods Fund, 0.00% in Gold and Precious
Metals Fund, 0.00% in World Precious Minerals Fund), Ferrari
NV (0.96% in Global Luxury Goods Fund, 0.00% in Gold and Precious
Metals Fund, 0.00% in World Precious Minerals Fund), LVMH
Moët Hennessy Louis Vuitton (1.00% in Global Luxury Goods Fund,
0.00% in Gold and Precious Metals Fund, 0.00% in World
Precious Minerals Fund).
- U.S. Global Investors vs. Competition
- USLUX Outperformed Its Index
Holly Schoenfeldt
U.S. Global Investors, Inc.
210.308.1268
hschoenfeldt@usfunds.com
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