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 December 31, 2021.
For the three-month period, total operating revenues were $6.6
million, a slight increase from the previous quarter and an
increase of approximately 39% year-over-year (YOY). Net income for
the quarter was $3.6 million, or $0.24 per share, an increase of
50% quarter-over-quarter. Average assets under management (AUM) for
the three-month period ended December 31, 2021, were $4.1 billion,
up slightly from the previous quarter and up 40% YOY. Operating
margin for the quarter was 45%, in line with that in the previous
quarter.
Demand for JETS Remains Strong, with More Than 300
Million Shares Traded in December 2021
The U.S. Global Jets ETF (JETS) remained the Company’s single
largest fund, nearly two years after the onset of the pandemic in
early 2020 attracted scores of deep-value investors. As of December
31, 2021, total AUM in the smart-beta 2.0 airlines ETF stood at
$3.2 billion, an increase of approximately 11% from the same day a
year earlier.
Despite the emergence of the Omicron variant, which contributed
to thousands of flight cancellations in the fourth quarter of 2021,
investors were eager to get exposure to commercial airlines, as
evidenced by elevated trading volume. A greater number of JETS
shares were traded in December 2021 than in any other month since
the ETF’s debut in April 2015, with 332.7 million shares trading
hands. More than 33.5 million JETS shares were traded on December
6, 2021, the most in a single session by a good margin.
“I believe the market sees an end to the most restrictive travel
mandates and border closures sooner rather than later, and that now
may be an opportune time to get exposure to commercial airlines,”
says Frank Holmes, CEO and Chief Investment Officer. “Here in the
New Year, a number of welcome developments have occurred that give
me optimism for 2022, including Australia’s announcement that it
would open its borders to vaccinated tourists starting in February.
In addition, TUI, the world’s largest travel and tourism company,
says that bookings for summer 2022 are approaching pre-pandemic
levels. The Germany-based company owns six airlines that, when
combined, would be the seventh largest aviation network in
Europe.”
Rising Rates Could Be Constructive for GOAU in a
Negative-Yielding Ecosystem
The Company continues to raise awareness and communicate the
benefits of owning the U.S. Global GO GOLD and Precious Metal
Miners ETF (GOAU), which could be well positioned to outperform as
the Federal Reserve has signaled its intention to begin raising
interest rates in 2022.
“It may seem counterintuitive, as gold does not generate any
income, but the yellow metal has performed well in rising-rate
environments. If you look at the past four Fed tightening cycles,
between February 1994 and December 2015, gold underperformed in the
months leading up to the first rate hike but then outperformed U.S.
stocks and the dollar six months and one year following liftoff,
according to the World Gold Council (WGC),” says Mr. Holmes.
"What’s more, with January’s inflation at 7.5% YOY, rates would
need to rise to over 8% to generate a positive yield; however, this
could ignite a global economic meltdown,” Mr. Holmes continues.
“Therefore, we believe negative rates could be with us for longer,
and this has historically been constructive for gold.
“On a related note, the average gold price was almost
$30-an-ounce higher in 2021 compared to 2020, even though it ended
lower from the start of the year. This was positive for gold
producers, which have seen the average price of the metal rise 86%
on an annual basis since 2000.”
Mr. Holmes notes that now may be a good time to consider an
investment in gold producers. “We’re very happy with how GOAU
performed in the final quarter of 2021 and in the full year,
especially given how challenging the metals and mining industry has
been,” he says.
GOAU, which took the Company thousands of hours of research and
backtesting to develop, uses a quantitative model to screen for
only the strongest precious metal mining companies. The
smart-beta 2.0 ETF generally follows a dynamic rules-based index
that selects gold mining companies based on fundamental factors
such as momentum in revenue, free cash flow and high-gross margins
on a per-share basis. Whenever a company dilutes these value
factors, it is kicked out of the index. The index and GOAU
rebalance and reconstitute each quarter.
U.S. Global Investors Welcomes the Smart-Beta 2.0 SEA
ETF on the New York Stock Exchange
The Company is thrilled to have launched its third ETF, the U.S.
Global Sea to Sky Cargo ETF (SEA), which became available on the
New York Stock Exchange (NYSE) on January 20, 2022.
SEA seeks 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 uses a smart-beta 2.0 strategy to determine the most
efficient sea shipping and air freight companies in the world.
Cargo ships represent approximately 70% of the ETF, while air
freight companies represent roughly 30%.
“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
discipline, as too many vessels and routes could oversaturate the
market. Consequently, shipping rates remained highly elevated
through the end of 2021.”
Adequate Liquidity and Capital
Resources
At December 31, 2021, the Company had net working capital of
approximately $29.9 million, an increase of $8.2 million, or 38.0%
since June 30, 2021. With approximately $23.2 million in cash and
cash equivalents, an increase of $8.7 million, or 60.6%, since June
30, 2021, and $8.2 million in securities recorded at fair value on
a recurring basis, 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 and six months ended December 31,
2021, the Company repurchased 10,457 and 24,104 class A shares
using cash of $54,000 and $136,000, respectively.
GROW Dividends
The Board 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
January to March 2022 is approximately $338,000. 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 Friday, February 18, 2022, to discuss the Company’s key
financial results for the quarter. 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 |
|
12/31/2021 |
12/31/2020 |
Operating revenues |
$6,574 |
$4,721 |
Operating expenses |
3,635 |
4,646 |
Operating income |
2,939 |
75 |
|
|
|
Total other income |
1,590 |
21,650 |
Income before income taxes |
4,529 |
21,725 |
|
|
|
Income tax expense |
939 |
5,064 |
Net income |
$3,590 |
$16,661 |
|
|
|
Net income per share (basic and diluted) |
$0.24 |
$1.10 |
|
|
|
Avg. common shares outstanding (basic) |
15,021,792 |
15,082,539 |
Avg. common shares outstanding (diluted) |
15,022,814 |
15,082,943 |
|
|
|
Avg. assets under management from continuing operations
(billions) |
$4.1 |
$2.9 |
####
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.
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.
- Gold Has Typically Outperformed Following First Rate Hike of
Fed Tightening Cycle
- Over Past 20 Years, Gold Has Been Up 86% of the Time
Holly Schoenfeldt
U.S. Global Investors, Inc.
210.308.1268
hschoenfeldt@usfunds.com
US Global Investors (NASDAQ:GROW)
Historical Stock Chart
From Jun 2024 to Jul 2024
US Global Investors (NASDAQ:GROW)
Historical Stock Chart
From Jul 2023 to Jul 2024