Earnings Call Transcript - GROW Q3 2021

Operator, Operator

Good morning, everyone, and thank you for joining us today for our webcast announcing U.S. Global Investors Results for the Third Quarter of 2021. I'm Holly Schoenfeldt. At the end of today’s webcast, we will be addressing questions that were sent in prior to today’s call. If you have any additional questions during the webcast, please send those to info@usfunds.com after the presentation and we will get back to you as soon as possible. Now, as seen on Slide number 2, the presenters for today's program are Frank Holmes, U.S. Global Investors’ CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer; and myself, Polly Schoenfeldt, Marketing and Public Relations Manager. On to Slide number 3. As always, we would love to offer anyone tuned in today, one of our gifts; all you have to do is send us an email with your mailing address and we are happy to get one over to you. On Slide number 4, during this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during the 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 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. Now on Slide number 5, you'll see a quick overview of U.S. Global. We are an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the company became a registered investment advisor in 1968, and has a long-standing history of global investing and launching first-of-their-kind investment products, including the first no-load gold fund. U.S. Global is well known for expertise in gold and precious metals, natural resources, airlines, and emerging markets. Now, on Slide number 6, I would like to hand it over to Frank Holmes, CEO and CIO for an overview of the period and what is driving the stock.

Frank Holmes, CEO and Chief Investment Officer

Thank you, Holly. And thank you, all shareholders, both new and loyal, for being with us through the ups and downs; it’s been an amazing rollercoaster this past year. But what seems to be consistent has been growth in assets. In that introduction, Holly, we forgot to mention that we couldn’t launch a blockchain crypto ETF, but we were able to launch HIVE, which has been an important part of our overall success. In addition to the airline recovery and the vaccine rollout, we benefited dramatically from the anticipation of the vaccine; that has led to significant growth in JETS. I hope in this presentation we will walk you through that. We don’t believe it’s over. We believe that Canada is just coming out of the pandemic. Europe is still behind, but they are doing everything to reach the level that America is at, and I think we will see more growth in the airline industry around the world. Our top institutional shareholders, Perritt Capital Management is at 5.52%, Diametric Capital is at 5.3%, Heartland Advisors is at 4.81%, and The Royce Funds have been with us throughout the whole period. We thank these shareholders for their loyalty. Vanguard, which is basically an indexed product, owns about 20% of the company. I, myself, own about 16% of the company through Class A and C shares. Monthly dividend payments have been consistent, and based on our financial strength, we should be able to maintain that. The Board approved a repurchase of up to $2.75 million shares of its outstanding common stock in the open market through December 31, 2021. During the three months ended March 31, the company repurchased 19,900 Class A shares using cash of approximately $127,000. The significance of this is that it’s an algorithm-driven strategy. The share price has seen steady growth, and we believe GROW has the potential for much more upside as we continue to show quarter-over-quarter and year-over-year growth in revenue, cash flow, and assets. GROW surges past its competitors, with good growth in revenue per share and EBITDA per share.

Lisa Callicotte, Chief Financial Officer

Thank you, Frank. First, I’d like to start with our financial highlights. We had another very strong quarter. Operating revenues have continued to increase and were up approximately 23% compared to the previous quarter and 595% compared to the same quarter a year ago. Our quarterly net income was $14.2 million, compared to a previous quarter loss of $1.6 million. Average assets under management were $4 billion, up for the quarter 38% from the previous quarter and 632% in the same quarter a year ago. On Slide 44, we recorded total operating revenues of $6.4 million for the quarter, which was an increase of 595% from $914,000 the same quarter last year, primarily due to increases in assets under management, especially on the JETS ETF.

Frank Holmes, CEO and Chief Investment Officer

We are witnessing outstanding performance from JETS and GOAU especially, and I'm excited about our future growth potential. It is fascinating to see how much demand there is for travel as people begin to feel more comfortable after vaccination. The enthusiasm I see in our shareholder base assures me that we are heading in the right direction.

Operator, Operator

Thank you, Lisa. As we wrap up today’s presentation, we will address some questions that were sent in by shareholders. And just as a reminder to our audience this morning, if you have additional questions for us, please do not hesitate to email those to info@usfunds.com.