GROW Third Quarter 2017 Results Webcast

Transcription

1 GROW Third Quarter 2017 Results Webcast Frank Holmes, CEO and Chief Investment Officer Susan McGee, President and General Counsel Lisa Callicotte, Chief Financial Officer usfunds.com US.FUNDS May 12,

2 Today s Presenters Frank Holmes Susan McGee Lisa Callicotte Lisa Aston 2

3 Forward-Looking Statements During this webcast we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don t pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and the corresponding Form 10-Q filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and U.S. Global Investors accepts no obligation to update them in the future. 3

4 About U.S. Global Investors (GROW) U.S. Global Investors, Inc. is an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the company became a registered investment adviser in 1968 and has a longstanding history of global investing and launching first-of-their kind investment products, including the first no-load gold fund. U.S. Global Investors is well known for expertise in gold and precious metals, natural resources and emerging markets. 4

5 GROW Strengths Strive to be the Go-to stock for exposure to emerging markets and resources Debt-free, strong balance sheet with a reflexive cost structure Monthly dividend and return on equity discipline 5

6 Top Institutional Holders of GROW 1. Financial and Investment 19% Management Group 2. Royce and Associates 12% 3. The Vanguard Group 4% 4. Newberg Family Trust 3% 5. BlackRock Institutional Trust Company 3% Source: NASDAQ Percentage of shares outstanding as of March

7 GROW Dividends Paid Monthly Consistently paid for more than 9 years Current yield at share price of $1.56 as of 3/31/ % Monthly dividend payment of $.0025 Approved through June

8 Share Repurchase Program in Motion The board approved a repurchase of up to $2.75 million of its outstanding common stock on the open market through calendar year 2017 During the third fiscal quarter 2017, the company repurchased 9,879 class A shares using cash of $17,000 May be suspended or discontinued at any time As evidenced by regulatory filings, Frank Holmes is purchasing shares of GROW pursuant to a Rule 10b-18 plan 8

9 Balance Sheet Strength No Debt Started investing in higher earning securities * 9

10 Earnings Per Share Quarterly Corporate events impacting earnings Transition to Atlantic Fund Services Closed Money Market Funds 14 10

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12 Quarterly Average Assets Under Management Remain Stable 12

13 Asset Breakdown U.S. Global Investors Funds Data for SEC-registered mutual funds as of March 31,

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15 The Buffett Effect 15

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17 Gold Seasonal Pattern The seasonal pattern shows historical tendency of when the highest and lowest prices occurred, based on analysis of daily prices collected over the last 5, 15 and 30 years by Moore Research Center, Inc. 17

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19 Gold Demand Appears Stable 19

20 Disruption in the Gold Market 20

21 Disruption in the Gold Market 21

22 Negative Real Interest Rates Are Good For Gold May Year Treasury Yield 1.93% Inflation 2.4% Return -0.47% Source: Bloomberg, U.S. Global Investors As of 5/9/

23 Fund Regulatory Costs Small retail investors potentially being harmed by industry interpretation of Fiduciary Rule. Wirehouse platforms focus on cheaper is better to avoid risk. Small Fund Family Small Shareholder Accounts 23

24 Managing Expectations See Our Managing Expectations Whitepaper at usfunds.com Understanding Volatility of Asset Classes Standard deviation based on 10-year daily data as of 3/31/2017 U.S. Global Investors (GROW) NYSE Arca Exchange Gold BUGS Index Daily Rolling 1 Year ±4% ±58% ±3% ±40% Gold Bullion ±1% ±19% S&P 500 Index (SPX) ±1% ±18% Oil ±3% ±39% Dollar Index ±1% ±9% Source: Bloomberg, U.S. Global Investors 24

25 U.S. Global Investors, Inc. (GROW) Income Statement Financial Analysis Lisa Callicotte CFO 25

26 Consolidated Statements of Operations (Unaudited) (dollars in thousands) Operating Revenues Three Months Ended March 31, Advisory fees $ 1,604 $ 1,279 Administrative service fees $ 1,669 $ 1,330 Operating Expenses Employee compensation and benefits $ 932 $ 886 General and administrative Advertising Depreciation and amortization $ 1,860 $ 1,870 Operating Loss (191) (540) 26

27 Consolidated Statements of Operations (Unaudited) (dollars in thousands, except per share amounts) Three Months Ended March 31, Operating Loss $ (191) $ (540) Other Income Investment income Total Other Income Loss Before Income Taxes (30) (392) Provision for Income Taxes Tax expense (benefit) 3 (16) Net Loss (33) (376) Less: Net Loss Attributable to Non-Controlling Interest - (26) Net Loss Attributable to U.S. Global Investors, Inc. $ (33) $ (350) Earnings Per Share Attributable to U.S. Global Investors, Inc. Basic Net Loss Per Share $ - $ (0.02) Diluted Net Loss Per Share $ - $ (0.02) Basic weighted average number of common shares outstanding 15,200,280 15,277,098 Diluted weighted average number of common shares outstanding 15,200,280 15,277,098 27

28 Consolidated Balance Sheets (dollars in thousands) Assets Current Assets March 31, 2017 (UNAUDITED) June 30, 2016 Cash and cash equivalents $ 3,434 $ 3,993 Restricted cash 1,000 1,000 Investment securities trading, at fair value 9,720 10,104 Accounts and other receivables Note receivable 2,000 2,000 Prepaid expenses Total Current Assets 17,270 18,174 Net Property and Equipment 2,273 2,466 Other Assets Investment securities available-for-sale, at fair value 3,524 3,481 Other investments 2,637 1,924 Note receivable, long term Other assets, long term Total Other Assets 6,493 5,706 Total Assets $ 26,036 $ 26,346 28

29 Consolidated Balance Sheets (dollars in thousands) Liabilities and Shareholders Equity Current Liabilities March 31, 2017 (UNAUDITED) June 30, 2016 Accounts payable $ 99 $ 148 Accrued compensation and related costs Dividends payable Other accrued expenses Total Current Liabilities 1,046 1,300 Commitments and Contingencies (Note 11) Shareholders Equity Common stock (class A) - $0.025 par value; nonvoting; authorized, 28,000,000 shares; issued, 13,866,601 and 13,866,421 at March 31, 2017 and June 30, 2016, respectively Common stock (class B) - $0.025 par value; nonvoting; authorized, 4,500,000 shares; no shares issued Convertible common stock (class C) - $0.025 par value; voting; authorized, 3,500,000 shares; issued, 2,068,947 and 2,069,127 shares at March 31, 2017 and June 30, 2016, respectively Additional paid-in-capital 15,648 15,651 Treasury stock, class A shares at cost; 740,985 and 688,700 shares at March 31, 2017 and June 30, 2016, respectively (1,748) (1,663) Accumulated other comprehensive loss, net of tax (16) (149) Retained Earnings 10,185 10,290 Total U.S. Global Investors Inc. Shareholders Equity 24,468 24,528 Non-Controlling Interest in Subsidiary Total Shareholders Equity 24,990 25,046 Total Liabilities and Shareholders Equity $ 26,036 $ 26,346 29

30 Significant Events Susan McGee President and General Counsel 30

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32 Media Coverage of Airlines ETF Over 100 million views through earned media exposure! 32

33 Newsletter Recommendations for U.S. Global Investors Funds 2.4 mil subscribers 1 million subscribers 400k subscribers 400k subscribers 300k subscribers 49k subscribers 22k subscribers 75k subscribers 5,400 subscribers 5k subscribers No-Load Mutual Fund Selections & Timing Newsletter 7.5k subscribers 33

34 Branding and Marketing of GROW 29 TV/Radio/Podcasts 34 Total Interviews 545 Web Mentions 25 Frank Talk Blog Entries 55 Newsletter Recommendations Data from January 2017 March

35 Thought Leadership Speaking Engagements and Research Around the World 35

36 Gold Game Film Show a Success on Kitco 129 episodes Kitco audience 10 million monthly visitors TheStreet audience 7.8 million monthly visitors 36

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38 Recognition As an Industry Leader in Investor Education 80 Awards MFEA 80 Mutual Fund Education Alliance STAR Awards The Mutual Fund Education Alliance (MFEA) is a national industry association committed to investor education, and its STAR Awards program recognizes marketing communications efforts in the mutual fund industry. The awards competition is judged by industry professionals, and based on criteria including educational value, content, design and functionality. 38

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40 Q&A 40

41 Disclosures All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years. The Purchasing Manager s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility. There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time. Note that stocks and Treasury bonds differ in investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features. Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the presentation were held by one or more accounts managed by U.S. Global Investors as of 3/31/2017: VanEck Vectors Gold Miners ETF (GDX), VanEck Vectors Junior Gold Miners ETF (GDXJ) 41