GROW Third Quarter 2017 Results Webcast...usfunds.com 1.800.US.FUNDS May 12, 2017 • 17-178 GROW...
Transcript of GROW Third Quarter 2017 Results Webcast...usfunds.com 1.800.US.FUNDS May 12, 2017 • 17-178 GROW...
usfunds.com
1.800.US.FUNDS May 12, 2017 • 17-178
GROW Third Quarter 2017 Results Webcast
Frank Holmes, CEO and Chief Investment Officer
Susan McGee, President and General Counsel
Lisa Callicotte, Chief Financial Officer
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Today’s Presenters
Frank Holmes Susan McGee Lisa Callicotte Lisa Aston
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Forward-Looking Statements
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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.
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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.
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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
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Top Institutional Holders of GROW
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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%
Percentage of shares outstanding as of March 2017 Source: NASDAQ
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GROW Dividends — Paid Monthly
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Consistently paid for more than
9 years Current yield at share price of $1.56 as of 3/31/2017
1.92% Monthly dividend payment of $.0025
Approved through June 2017
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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
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Balance Sheet Strength – No Debt
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Started investing in higher earning securities
*
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Earnings Per Share Quarterly
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Closed Money Market Funds
Transition to Atlantic Fund Services
Corporate events impacting earnings
6¢
14¢
2¢ 2¢
2¢
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Quarterly Average Assets Under Management
Remain Stable
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Asset Breakdown — U.S. Global Investors Funds
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Data for SEC-registered mutual funds as of March 31, 2017
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The Buffett Effect
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Gold Seasonal Pattern
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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.
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Gold Demand Appears Stable
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Disruption in the Gold Market
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Disruption in the Gold Market
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Negative Real Interest Rates Are Good For Gold May 2017
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5-Year
Treasury Yield
1.93%
Inflation
2.4% Return
-0.47%
Source: Bloomberg, U.S. Global Investors
As of 5/9/2017
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Fund Regulatory Costs
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Small
Shareholder
Accounts
Small Fund
Family
Small retail investors
potentially being harmed
by industry interpretation
of Fiduciary Rule.
Wirehouse platforms
focus on “cheaper is
better” to avoid risk.
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Managing Expectations
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Daily Rolling 1 Year
U.S. Global Investors
(GROW)
±4%
±58%
NYSE Arca Exchange
Gold BUGS Index ±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
Understanding Volatility of Asset Classes Standard deviation based on 10-year daily data as of 3/31/2017
See Our Managing
Expectations
Whitepaper at
usfunds.com
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U.S. Global Investors, Inc. (GROW)
Income Statement – Financial Analysis
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Lisa Callicotte
CFO
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Consolidated Statements of Operations (Unaudited) (dollars in thousands)
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Operating Revenues Three Months Ended March 31,
2017 2016
Advisory fees $ 1,604 $ 1,279
Administrative service fees 65 51
$ 1,669 $ 1,330
Operating Expenses
Employee compensation and benefits $ 932 $ 886
General and administrative 836 871
Advertising 28 33
Depreciation and amortization 64 80
$ 1,860 $ 1,870
Operating Loss (191) (540)
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Consolidated Statements of Operations (Unaudited) (dollars in thousands, except per share amounts)
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Three Months Ended March 31,
2017 2016
Operating Loss $ (191) $ (540)
Other Income
Investment income 161 148
Total Other Income 161 148
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
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Consolidated Balance Sheets (dollars in thousands)
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Assets March 31, 2017
(UNAUDITED) June 30, 2016
Current Assets
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 803 787
Note receivable 2,000 2,000
Prepaid expenses 313 290
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 234 212
Other assets, long term 98 89
Total Other Assets 6,493 5,706
Total Assets $ 26,036 $ 26,346
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Consolidated Balance Sheets (dollars in thousands)
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Liabilities and Shareholders’ Equity March 31, 2017
(UNAUDITED) June 30, 2016
Current Liabilities
Accounts payable $ 99 $ 148
Accrued compensation and related costs 326 451
Dividends payable 114 115
Other accrued expenses 507 586
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 347 347
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 52 52
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 522 518
Total Shareholders’ Equity 24,990 25,046
Total Liabilities and Shareholders’ Equity $ 26,036 $ 26,346
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Significant Events
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Susan McGee
President and General Counsel
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Media Coverage of Airlines ETF
Over 100 million views through earned media exposure!
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Newsletter Recommendations for
U.S. Global Investors Funds
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2.4 mil subscribers
No-Load Mutual Fund Selections
& Timing Newsletter
7.5k subscribers
400k subscribers 300k subscribers
400k subscribers
49k subscribers
75k subscribers
5k subscribers
22k subscribers
1 million subscribers
5,400 subscribers
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Branding and Marketing of GROW
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29 TV/Radio/Podcasts
34 Total Interviews
545 Web Mentions
25 Frank Talk Blog Entries
55 Newsletter
Recommendations
Data from January 2017 – March 2017
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Thought Leadership Speaking Engagements and
Research Around the World
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Gold Game Film Show a Success on Kitco
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129 episodes
Kitco audience 10 million monthly visitors
TheStreet audience 7.8 million monthly visitors
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Recognition As an Industry Leader in Investor Education
80 Awards
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80 Mutual Fund Education Alliance STAR Awards
MFEA
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.
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Q&A
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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)
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