Q1 2021 U.S. Global Investors Inc Earnings Call
With the ETF business and the other mutual funds, but we were very happy we'll be able to do it now we're busy rebuilding our balance sheet and income statement and starting to pile of cash.
So this is another nice visual to show you the turn around and grow 10% 10 cents growth and then we had 13 cents growth.
So back to back quarters, and I, just think the future looks very very promising.
For that Theres been some demographic studies of talk for both that's changed that these what's taken place for our company, but what's important is that we have definitely in my I have seen that turned the corner.
We still want to go through a few more quarters of showing that growth of caution and that building that book value back up again.
And with that.
Then we can consider where people have always been a sending me and ask me we buyback more stock we increased the dividend and I think that weve, whether just a horrible horrible long winter in resources and they return and we spent five years building the brand and ETF business before.
Is it slowed it so it costs a lot of money and we lost money during that period building out in investing in the building of the brand of objects, but as you can see here on some lower quarter four grow revenue.
And the next visual is.
How we've done.
Against our peers is the Orange is growth and it gets other fund groups such as fuel price Franklin break has lot of emerging market funds like ourselves Wisdomtree is focused on EPS period and invest those biggest fund is acute cucuta ATM, but we're cells have been able to take.
Turn and actually be more reflects of and participate in this service has taken place.
And were shocked me was the sort of the sell off of experienced the past couple of months well the absence of continuing to grow I think is more of a function of a lot of small cap stocks seem too and the small cap funds start to lag and there is sort of a negative sentiment going into the election, but after yesterday's see how much coal was up.
And some of the other assets the airline CTF they were up substantially big swing for us in overall assets. The next visual is highlighting just CTF since total assets higher it's truly is the only airlines DPF. We spent a lot of time building this not only the brand.
But we spent a lot of time in building that model and it's very much a share with you a unique client model. It's not just actors were picking stocks into they are factors other portfolio Recalibrates every rebalances every quarter. So it's a dynamic process demands for the airline EPS continues.
And what we've seen is the daily we look at the daily volatility of the airlines that F. It's very much like.
The airlines industry like gold stocks, they have a big daily volatility and what Weve attracted at which I think is so key for price discovery is tens of thousands of young millennial traders. They love the airline industry. They all the airline industry and they trade at.
They are looking for the next big surge of vaccine comes out. This this really bounce in coal that.
We'll sort of slowdown in Europe, but the US continues to chug along in a positive way. So I think positive news of Delta coming out and saying that they are.
They expect by the first quarter, but they probably turned the corner and along with southwest Airlines is a very positive statements are the fundamentals of the airlines they are still losing money, but a lot less rate and not try to explain so some of the factors that try to monitor if you're trying to monitor the health of the revenue line with Airlines is best.
All the TSA Daily report that shows you how many people they appear but demand continues to improve.
And you can see here for anyone this doesn't understand how to calculate this it's we generate 60 basis points of revenue.
And as the funds grow 60 basis points equates into 12 as you can see 12 million. The revenue from Jess has basically gone from half a million dollars to 12 million in revenue is a very simple model to understand and we see the daily trading volume moving with gold and also.
So moving more now with airlines.
Next is a visual showing you a seeking alpha.
The following investor subscribing to Jay Jets updates on seeking Alpha this continues to grow which is very positive and constructive.
Here's the magic visual this here's what point been juice and bond funds are no doubt and the hedge funds that are short airlines are long airlines they want to reposition so they go long or short jets, we've seen big trading volume in our in our options on jets. So it's becoming a very liquid vehicle basically for simple math go.
From 35000 shares a day trader to $3.5 million.
And that has been very important attracting a bigger broader ecosystem from hedge funds institutions to day traders.
And and so what we're seeing is that the track this data.
The number of travelers and went to a million and thats been a game changer and thats when companies start coming out the airlines companies in saying that they believe that the when the tunnel.
As much brighter by the next in the next six months.
You recall a year ago. The PSC was hearing about 2.7 million people and then by mid April and it all into less than 90000 people a day the as the U.S. shutdown the biggest busiest airport in the world was Anchorage, moving metallurgical equipment from Asia over.
North America Europe. This is all changed especially domestically what we're seeing in the us and the airlines the business travel hasn't picked up but tourism has and you're seeing the airlines use quat models and it reminds me a lot of what Apple has been doing if a covert area as a signal.
Thank you breakout Apple will shutdown store and a week and sell things online and then also when things slow down the back and open up that store. The airlines are recognizing that tourists tourism is big so even United Airlines as flying from small cities in America, and in Pennsylvania, and New York, Michigan.
Illinois to destinations like Fort Myers.
Inexpensive fast path at the beginning of October Southwest Airlines also to start flying from Phoenix to comp public say Lucas in Mexico.
And so this is all that to mean amazing to see that tourism is an important part of that trial.
And the airlines are able to adapt quickly previously airlines flew predominately through their hubs throughout North America and then they went on to the second path today. They are doing direct flights from these smaller areas and and they pivot they move much more quickly and the next visual is as CEO.
Bastion.
Delta and he says they feel that would be breakeven by the spring of 2021 very positive for the industry Southwest Airlines is also articulate that what happens in the air and these new EPS or that you've come out with its you really can't get on platforms and to get through 50 million and then once you get to a 100 billion expense.
As greatly Tommy platforms, you get onto and then the next threshold is 500 million and then it's a billion. So you are seeing as some of these big Wirehouses.
That they are very slow to move to put you on their system in the due diligence but.
What we've seen is a big breakthrough.
And particularly you BS, which has a much higher book of business, they're showing up as a major player in the space Raymond James.
No doubt the minerals the trade to interactive brokers that Robin Hood. They are very important for the ecosystem as day traders are increasing the volume it makes that hedge funds much more.
Interested in going short or long beach, Epicel for trucking going long and shorting airline stocks and what happens is when they want to unwind a position because of so much liquidity. They don't redeem to the degree that used to they just sell into the marketplace on their hedged and pick the top carriers trading. So we're very happy about this.
Broad distribution and I want to thank everyone apples firms and all the gatekeepers and help.
Yes, good get fast track that we get our heads wholesaler to get on those platforms and making sure that.
They have access to our research and what we're covering.
And the other part of this importantly shown in previous visuals is that the day traders exploded when they went to zero commissions and particular Robin Hood and Acorn, but this expanded with TD Waterhouse and now Schwab, so you're seeing that more of the groups are doing and they make their money from deposits cash deposits.
The new margin lending and they make their money from securities lending.
Or it's to me, it's really interesting held different POS you can go to make money in this industry and commissions become a de minimis number.
But before you want to comment trade this or invest in this sector or growth I highly recommend that you respect the DNA of volatility of different asset classes at gold bullion and that and the S&P 500 have almost the same DNA of volatility over 10 days over one day I guess.
It's 1% is on a daily basis, it's a non event center. So the time to go up or down 1% and as you can see both stocks are much higher than gold and you could see bid point is massively greater over five days or 10 days and oil no doubt you can see here that oil is very volatile the one demo until.
It is shocking years at 10% and that impacts the airlines because the cost of energy is their second biggest line item and so you get a whole community of traders that as oil is trending higher there out of jets as oil starts to correct and Paul they start buying jets and so that to me.
Adds to that ecosystem that we just don't want to have a bunch of Wales owning the TBTF for any of our products, we want to have Tunis Dolphins.
Barracuda Sharks minerals group as we want it all we want as this robust ecosystem and just clearly showing that and go you is getting that traction two words volume is up dramatically and has gone through the $100 million level and we are seeing.
Family offices come into it because of going you when we talk about specifically because of its orientation towards royalty companies.
Here's something that shocks and I am going to media and particularly in New York to seize always to have this propensity.
Hi probability of being negative both go it's been up greatly whats gone too much gold starts to correct. I told you it's going to go lower it not recognizing this century that goal is oak performed the S&P 500, threefold, that's 300% difference and it's a 26% over this year.
It's all performed the S&P so gold gold is a significant and critical asset class and that's one of the largest heads around the world has a waiting in gold quite often can be over 10% any recalibrate such rate Galileo's Bridgewater.
The next visual.
Is you too.
This production we've been putting it was educational pieces. There are two minutes is cpis fake news what does it mean for both.
And I highly recommend that you click through and use described to you as close.
Information that we're putting out research and what we tried to show on that too. Many clip was inflation is closer to 8% and reported 1%. If you use the algorithm that determines what CPR is that was used to 1980 when gold hit a 50 completions went over 12% of CP CP.
Hi, I was over 12% and silver hit $50, an ounce that if you use that algorithm today inflation running more like 8%. So that's published by John Williams Shadow Statistics.
I think the people to realize is that the reported cpis. It's amazing housing is up 10% to 15% across America and some places like I said, 15% Thats big inflation gas pump inflation's up everyone driving to work during the day, it's surge, but inflation of 1.3% I don't think so so.
So.
I think it's important for investors to be educated and Thats, a key value driver for gold and smart hedge fund managers like Ray Dalio goal.
The oldest benefit from excessive Monday printing and have written about this if youre not a subscriber to Frank talk a highly recommended the market team put together a great information the investment team helps right the investor Alert every week and clearly the marketing team.
And the editorial board that we have there puts lipstick on everything we do and checks for compliance et cetera, but we really try to be faster than what brokerage firms publish and right now what you're seeing with the success of regulations come out of Europe for the past 15 years now this mythic to really hurts.
Investors getting information that they used to be able to get even for major firms like Deutsche Bank you have to be Myfico Compliancy for me to go listen to.
Webinars.
So this is a new world. So we try to be a provider a timely insightful informative provider and what this visual is showing you that there is a correlation between the amount of money printing and money supply year over year and the gold prices and if you go back and you could see this sort of trend. The other part of that is negative real end.
Interest rates, so when you add money printing and negative real interest rates, it's a great barometer and tool for navigating gold markets, let's come back with the products that generate the revenue to pay the salaries and allow us to pay dividends and buyback our stock.
Going you as expanded its availability.
So its over $100 million.
Typical by this we're excited about it and.
Continue to tell that story like we did this week and we had a huge response.
I think almost a record number sign up the listened to.
The world of gold and the next visual is our investments we couldn't launch an ETF.
In the space of Bitcoin still many people try and spend a lot of money nothing has happened U.S global investors I went out and co invested in launched Hi block chain technology, we own 10 million shares we mined it perion and big point, using Green energy, we money uranium and Iceland, Sweden and we.
Mine Big point in.
Come back.
So it's been a through an incredible lower coaster ride.
Hi bus shelters that investment from our seat at 30 cents to $6 and back down to 10 cents them back up it's just really it's important for investors to recognize it correlates with the price of the period.
And.
And this year is about the major events moving the price a bit coined the winter a bit coin in a period of digital money bottom. It bottomed in the winter I would recall the winter season was about 18 months, none needs 14 months ended bottom when JP Morgan stop trash talking the digital world and they launched or.
Owns stable point, then it exploded when Facebook allowance libra than the world backlash against Libra, It's sold off and now pivoting up on its own today, it's a hit $16000. So I think the bitcoin Andy a theory in spaces as turn Andy hearing has been on a.
Huge run, but Wouldnt really had a big impact in the past 10 days is the press release that pay Pal will allow cryptocurrency buying and selling and shopping on its network that came out and that was that act on a $1000 a bit coin.
So I think certain news is driving as it goes more mainstream and any theory on which you can see a next visual.
This picture of myself, which on molybdenum molded economics I went to visit the Icelandic facilities.
This is almost two years ago, but the theory miners are gaining big traction with the huge movement and decentralized finance so often they use the theory algorithm as a backbone and so therefore, they need a theory and weve seen during prices explode on the upside.
And this year high of increases next generation Bitcoin mining power to Green energy and cut back in September we put a record three mining production driven by the DEA by demand than October reported the first quarter financial results on the next one is the exciting part that added to our earnings. This quarter is the is the rebound.
And since I've got control of its destiny.
We had a great move in in in our stock where the most liquid name.
All these companies and you can see year to date, we are still the best performer.
Correlation is extremely high with the theory.
It's more than 70% correlation on a daily basis, if you do the taping on it it's more like 90%.
Are we also made an investment several years ago, which we're really thrilled about is into the underpowered entertainment.
And Thats, a company that Tim Gamble, and Frank just drug I created and if you recall given all the the history Lionsgate entertainment to that was created basically by those two individuals and this is a company in this exploding and success of the animation and Asia.
Recently won an Emmy for the last kids on Earth.
Their revenue is.
Serves above a $100 million they have free cash flow to have rising cash flow right.
Rising revenue per share growth. This is just a sweet undervalued company as they are producing a lot of content for.
Amazon for Netflix or even though overall Disney their animation team will be contracted out.
So this is an investment and itself has had a great run this year because of cold at the need for content the need for new content, we have more people working for loans staying from home.
Entertainment has come from home and so we know what our funds one of the things we bought early with the home depot because the home depot stayed open during the whole lockdown and everyone was busy second homes that are repairing their houses.
And parking lots for home depot or pack, where everyone else was empty. So its interesting to see that certain companies have clearly benefited from cold. It just like we have we have been the recipients and one of the biggest and most important parts as the unleashing of the millennials and I haven't seen this until the Ninetys I recall when all the.
A sudden baby boomers discovered mutual funds and tech stocks and you we had a super cycle. The unleashing by President Clinton of the Internet to the capital markets. He had tax reform he had reforms on telecom and media and technology industry.
All that basically 800 deregulate streamline regulations, you get massive job creation is fiscal policy, one or one and with that.
The money at that time, the baby Boomers My age we're just.
Jumping all over this space for form one k.'s accumulate a rough quarter with Iraq and.
There is a huge growth for today's Cts entity. It's millenials, if we're going to witness the largest wealth transfer from baby boomers to millennials as good numbers are bantered around like 10 trillion dollars.
And so now we discovered and the predominate using you tube and a podcast to get their information because it's harder and harder to get a research from the brokers for brokerage firms and the coverage and they're very caught up in the speculation of micro cap stocks.
So I think that I remain very bullish the constructive on overall, the economy and the stock market and stay tuned for the second leg of the airlines industry vaccine has discovered or.
Our is implemented Thats works, you're going to see a huge explosion and travel again in the airline industry now I want to turn it over to hardware can Lisa Callicotte who's been busy throughout this whole bear winter cycle that we're always experienced until the recent take off of our EPS she's.
Been managing the process and I think are and so now we're going to talk about the results and growth.
Thank you Frank Good morning, first I'll start with our financial highlight they have very strong corner enhancing and previously we thought that this quarter was really demonstrate the results of the impact into our capital.
And this is reflected in the fact that our quarterly average assets under management and our operating revenue increased approximately 300% contained in the same quarter last year and our quarterly net income was 1.9 million.
Quarterly operating revenues on a highest booking six years to quarterly net income was the highest it's been in the last nine years.
Now well review more details on the financial statements and according to ending September Thirtyth totaled 20, beginning on page 14, we came to the quite a total operating revenues of $3.2 million at a corner, which is an increase of 2.4 million, 304% from the 804000 in the same quarter last.
Yeah.
Increased primarily due to the increase in our average assets and investments related to our smart beta capsule, yes.
And within while operating expenses increased 57% and that was mainly due to higher FDIC expenses and higher bonuses.
Performance.
Operating income for the quarter ended September Thirtyth, 2028, 987000, compared to an operating loss. The phone line last year on slide 21, we see other income of acquired a million dollars in the morning related to unrealized gains on our investment compared to unrealized losses at quarter end in September.
In 2019.
Net income attributable to USPI after tax in the quarter of 1.99 to 13 cents per share, which is an improvement of 5.5 million compared to net loss of $3.6 million or a loss of 24 cents per share in the same quarter for fiscal year totaled 20.
Moving to page 23, we can still have a sound balance sheet includes a high level of cash and marketable substantial security and make up 73% of our total assets.
Slide 44 current liability, which are relatively consistent with Q or any equity and slide 45, you can see our stockholders' equity disarm a company has a net working capital of 9.39 wells and a current ratio of four point.
5.4 unwind.
That I will turn it over to Hal.
Thank you I think that all right as you can see on this slide a majority of our mutual fund assets are in emerging market and natural resources, while 28% grain domestic equity than X and income and Africa distribution more than three quarters of assets come from retail investors with 18% coming from institutional investors.
[music].
Our sales and marketing efforts have continued to focus on our mutual fund, including those concentrated on both natural resources and emerging market.
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Tom like you're mailing address and we are happy to and you add value or jet Pat or both.
A quick reminder, on that.
And finally, as we wrap up today's presentation, we'd like to open it up to questions. As a reminder, you can enter the questions and the control panel on your screen. You can all disconnect class question directly to like anytime by E mailing and felt like signing dotcom. So if we don't get Q. During net presence that can be shared to do that and we're happy to reply and we will be fine.
During applet all questions Dave.
So with that I don't have a few questions here I'm going to start with easily that an agent finished your section but can you. Please briefly.
Briefly re summarize how the increase in AUM will impact cash flow and profit margins.
Again, we're very excited about the quite are and how that has a vast improvement in both our profit margin and cash flows and our operating profit margin for the quarter was approximately 29% and we had positive cash flow and through operations and.
Our total cash increased approximately 660000 and from the June 30 quarter.
So we really feel like this shows.
That that quarter ending June Thirtyth last a turning point for us and were very happy that were seen as.
More complete results of that is correct.
Lisa bright.
Great I have a question for you are.
Are there any products in the pipeline.
Yes.
I think whats important is the streamlining I would come back on these financials one of the things that impact us. During this bear cycle was also the lagging performance because we have a holcomb fee and a year ago a lot of the funds were just really not doing well, but today.
80%, 90% of the funds are are plus or there is great to see so that's not that's a real positive notable fund performance of mutual funds and what we did do is launched the first luxury only dedicated fund and I remember people question for me are you Crazy Kovats.
But it's interesting that the discretionary products have done exceptionally well.
Costco is done well net.
Netflix has done well, but Tesla is a discretionary stock Amazon.
So to me is as important to see what that how that luxury industry has has done its remarkably been resilient and from the lows that had a wonderful run.
So we have the only mutual fund that has luxury focused.
Investments and so I'm thrilled about that.
The biggest thing that working on Holly that you're seeing in the industry as more and more how do you convert your mutual funds or the EPS and I think that we've all been.
Listening to presentations, we've spoken to people that are in the process now of doing it we've been talking a council. So we do think that it's just a better product.
Delivery for investors and traders out there the ats, so we're going to be really focusing on that and the same time, we are drilling down of looking at.
Other products.
Great.
Yes, I have another one for you are you planning to continue your stock buyback and dividend distribution.
Well, our board averages our stock repurchase program and our dividend distribution strength lately and currently as Frank mentioned earlier, we are repurchasing shares based on an algorithm when our stock trades down.
Or at the lowest certain threshold and and this program can be adapted and typically I would say the board considers that companys financial position and cash flow when determining to continue or change these programs and though I can't predict the future and as the company.
Internal metric strengthen the profitability, adding creating the stock buyback and or the dividend is more likely great.
Great and breakeven briefly touched on that when you're talking about any new products in the pipeline that can you go back to discussing how the investment team is working to improve performance at the mutual funds.
It's it's really the disciplined quantum mental approach.
Dynamic rules based thinking.
And so thats, how the global resources was underperforming its index and today its crushing yet.
And the GA is called the GE and our efforts while we are so much further ahead of that performance of the Gn R.
Both a top down industry allocation to a stock picking allocation and it's just doing phenomenally well, so I'm very thrilled about.
Global resources that we show that we can go be an ATM an index like the GR.
So I think the best.
Thats the biggest difference yes, great and another question that came in late and maybe you can touch on that how is the investment in Galileo dealing well actually and sold our investment in Galileo in March at 2020.
And you know got Atlanta, Atlanta is having the same struggles with lot of companies and in the mutual funds and industry and we did have some really good years with an engineering grateful for that and we both decided to go ahead, and partly and they have been losing money and recently and and so therefore as.
They are actually considered included in our discontinued operations in our financial statement.
And so we no longer on our.
That is what I.
I think what's important there is that we didnt need them with US a technology fund and we're a major investors have not.
And their focus is on that.
We're going to take that product and this should have also just great numbers. So we are still in the best fit it in.
Indirectly in the company and its true of specialty fund.
Okay.
Another question I have and it might even take that can you speak to your building tenant then.
Are any leases rolling off are there any update about that because of the pandemic.
And actually we did have a couple and tenants and and and now be rolling off in the next couple of years and but we've also seen a little bit of interest and because we do have two smaller areas and our office eight that we can meet channel and lending team and.
So we are getting a little bit more into a slightly into comparable increases okay, great and Frank do you have any closing comments spread the shareholders tuning in today.
Well I wanted to say to further their patients as we.
As we go into Cts business.
It took a lot longer than you think it took three years, we're going to use to get above the $100 million. It took five years or chips. All the sudden we discover and said Unprecedent records. These ideas. So when you come up with them. They take a lot of late work in marketing those very well.
The educational and the market apartments. So the 190 educational marketing awards for that but it just takes time and thank everyone for their patients with us as we build out.
Working on some exciting new ideas, so going into the new year.
New products, but I will look forward to a mechanism where mutual funds to be converted easily for the shareholders and EPS I think that will be a great boon for us and for overall capital markets wonderful. Thank you for the questions every line and of course for tuning.
And is.
As a reminder, if we didn't get to your question, we would have we'd be happy to answer. It afterwards, just shoot us an email npls and dotcom. It's concluded global investors webcast for the first quarter at 2021. Thank you all for your participation.
Okay.