U.S. Global Investors, Inc. (GROW) Earnings Call Transcript

Here's how things turned out for investors in Q3 of 2026. Slide 2 introduces who'll be speaking on today's program: Frank Holmes, who serves as CEO and Chief Investment Officer of U.S. Global Investors, Lisa Callicotte, our Chief Financial Officer, and me, Holly Schoenfeldt, Director of Marketing. Let's go to the slide after that. Over the course of this webcast, forward-looking statements regarding our relative business outlook could be made. Statements of that kind, along with any others shared here today that aren't tied to historical facts, carry risks and uncertainties that could materially affect actual results. For a fuller picture of the factors that might cause actual results to diverge materially from anything described today in forward-looking statements, please check our press release and the corresponding Form 10-Q filing. Such statements reflect conditions as of today, and U.S. Global Investors takes on no obligation to update them down the road. Now on slide number 4, our valued shareholders' ongoing support always means a lot to us. Should you want one of our signature U.S. Global hats shown here, simply email your mailing address to info@usfunds.com, and we'll happily send one your way. All right, let's advance to the following slide, where I'll give a quick overview of the company. U.S. Global Investors operates as an innovative investment manager, bringing vast experience in global markets and specialized sectors. Our approach uses a quantamental strategy to build thematic Smart Beta 2.0 products. Initially established as an investment club, the company became a registered investment advisor in 1968 and has built a long-standing history of global investing and launching first of their kind investment products. Last but not least, thematic investing is our expertise, especially gold and precious metals, natural resources, airlines and luxury goods, all pursued through a quantamental approach incorporating both macro and micro factors. Let's proceed to the slide after this one. This slide, which we call the DNA of volatility, frequently opens our presentations, serving as a reminder that market swings form a normal part of long-term investing. Keeping that in mind, I'd like to turn things over to our CEO and CIO, Frank Holmes. Frank?

Thanks, Holly. Holly's correct — you truly need to grasp the importance of volatility, since any time global events change, those numbers shift as well. Consider a stock such as Tesla, familiar to all of us: when it was added to the S&P 500, its volatility declined. Gold bullion followed the same pattern: once the ETF came out, its volatility dropped. On the other hand, other events may move things in the opposite direction and drive volatility up. When it comes to Bitcoin, a 3% swing either way within one day amounts to nothing significant, and the airline index acts identically. You can see the same readings appear over a period exceeding 10 trading days when you compare them with gold. And gold stocks move up and down even more sharply than gold itself. Next, please. I want to express gratitude to our shareholders — Gator Capital Management, who recognized our deep value and own 7.9%, plus 6% held by Capital Wealth Advisors and Vanguard's index. Next, please. As CEO and CIO, I personally hold approximately 19% of the company together with roughly 99% of voting control. Such a structure will satisfy the '40 Act and the regulations that apply to money management firms. Next, please. Thematic products come from strategy and tactics. Anticipate a demanding process — thousands of hours of back testing prior to launching any product — examining how well it holds up through both rising and falling cycles. Our mission: to help people feel financially happy and secure, confident that their wealth keeps growing. That word "consistently" truly counts when we adopt a longer perspective. Over the short run, there are periods when gold — what we're most known for — trades sideways or loses ground. Throughout this century and throughout this decade, its performance has been phenomenal. During the last five years it has genuinely taken off, and during the last two years it has become evident that this unfolds over lengthier time frames. We strategically buy back our stock using an algorithm on flatten-down days, and we succeed in retaining cash for future growth. Please — we sincerely enjoy gaining more subscribers who follow how we think, so subscribe if you'd like. That's something we intend to grow amid highly competitive marketing. Pushing marketing costs lower has enlarged our follower base, and we've broadened our exposure to the Bitcoin ecosystem, since we did launch HIVE, the first crypto mining company to go public — a dual engine, with tier 1 data centers for Bitcoin mining, while tier 3 is now building AI factories. Next, please. Let me briefly take you back through the capital markets and how our products align with them. Along those lines, there's a wonderful quote from Steve Jobs: "You can't connect the dots looking forward." One more point worth noting — almost $20 an ounce. You can only link them by looking backward.” You’ve got to believe the dots will connect somehow to what lies ahead — and that same mindset appears in Smart Beta 2.0: back testing, checking whether you can link the dots, what the factors are for portfolio construction, and how various themes demand different key factors when picking stocks. Next, please. The trend carries on. Money keeps leaving mutual funds through redemptions, while ETFs continue to grow. What really matters to us is watching actively managed ETFs grow. Let's move to the next one. As the ICI Fact Book shows, the U.S. ETF market as a whole remains number one worldwide. Total assets have surpassed $13 trillion. Let's move to the next one. Now, the growth of active ETFs. During 2025, active ETFs drew $500 billion of net inflows, and more than 80% of ETF launches that year were active. That stands in sharp contrast to the era when JETS first launched. By Q1 2026, active ETFs were pulling in nearly the same amount of money as passive ETFs. Let's move to the next one. I want to emphasize that I believe Cathie Wood was essential in building and making a success of things when she managed to grow the technology suite of ETFs to $100 billion, and genuinely rode the whole Bitcoin surge early on along with Elon Musk's building of Tesla. Being an early pioneer, and being active, and keeping it to herself is truly research. The notion is that people can download research and look at it at the same time, seeing how she aims to participate through her products. I think that was a massive game changer. In that setting, the company we believe is one whose stock is deeply undervalued, and we keep buying back shares while the price is flat or declining, as I said before; this forms part of the company's 2-pillar strategy for boosting shareholder value through dividends and buyback amounts each year. Let's move to the next one; during the three months ended March 31st, the company bought back 176,592 Class A shares in total, spending roughly $534,000 in cash. Starting from 12th of 2019, we've reduced shares outstanding by about 20%. Let's move to the next one. GROW through buybacks. This only looks at the last 4 quarters. As you can see, when markets turn volatile and fall, we wind up purchasing more during those down stretches. Let's move to the next one. The crucial element in this thinking is what's known as Total Shareholder Yield; that means dividends plus buybacks plus debt reduction. Because we carry no debt, it's really centered on dividends and buyback divided by the market cap. Let's move to the next one. Looking at a comparative analysis, you can see that basically our monthly dividend is $0.0075. That comes out to a present yield of roughly 3.4%, which works out to almost $20 an ounce. If we go to the following slide, putting this into context is truly helpful, because what the dividend growth model does is compare dividends with five-year government bond yields. As you can see, our yield sits somewhat below a five-year, yet when stock buybacks are factored in, total shareholder yield reaches 9.96%; that fact alone argues for continuing to repurchase the stock, and it makes this a highly attractive investment. Let's go to the following slide. Assets of $1.63 billion, with operating revenue of $2.8 million quarterly. Let's go to the following slide. The assets we manage have generally been climbing, which is a positive and encouraging indicator given the turbulent markets in which we operate. Even so, it doesn't truly matter. Twelve months ago, we had — and personally I find this truly fascinating — the contrarian angle being Liberation Day landing on April 2, along with how that impacted the assets and how we steadily bounced back from that correction. Some of our products did exceptionally well, even with the unfavorable sentiment. Following slide, please. Measured quarterly, EBITDA per share basically captures part of that volatility. Lisa can take you through it in greater detail, and if you'd like more specifics, feel free to call her, reach out, and she'll walk you through some of the swings we've experienced. Looking back at last year's June quarter, that stretch included April's Liberation Day, assets fell, and then assets steadily recovered afterward. We've also run into certain other GAAP reporting items that create this sort of non-cash volatility. Following slide, please. We choose to benchmark WisdomTree's 100% ETFs. At Invesco the figure is 40%, whereas for us it's 63%. Roughly speaking, when you compare our operating revenue price to book, we are the deepest value; that's why we keep repurchasing our stock. We keep generating stronger returns on assets. Our pre-tax margins remain solid. Our dividend yield is the highest, and our price to EBITDA looks exceptionally appealing next to the broader market — almost $20 an ounce. Following slide, please.

Someone with a properly diversified set of holdings ought to keep between 5% and 15% of it in gold — that's the view of Ray Dalio, who rules the universe of giant hedge funds, the largest of them, set to endure at $136 billion, extremely quantitative in his discipline, and a strong supporter of gold too. Because G20 nations routinely experience mismatches between what their central banks do and what their finance ministries do, the metal's price climbs more quickly in those nations where the mismatch is larger. On to the following slide. This is a bit like joining the dots. You can observe right here that gold has enjoyed a tremendous rally since last year, across the last 12 months, going from below $2,000 to beyond $5,500. It pulled back, and at present it's recovering. In my view gold is still extremely appealing for a host of fundamental reasons. On to the following slide. Among the strongest is Modern Monetary Theory; put simply, it holds that governments during this century have shown a tendency to print their way out of every difficulty, promising to repurchase that debt once their nation's economy gets better, yet they never actually do it, and so the debt keeps expanding, and there are roughly 8 billion ounces of gold above the earth's surface, yet the creation of money outpaces the pace at which gold emerges from the ground or sits above it. That makes physical assets such as gold an appealing thing to own. To me it's simply a crucial piece of a diversified portfolio for safeguarding your family's legacy and holding long-term exposure, gold stocks especially. On to the following slide. A major driver behind purchasing gold isn't only the fear trade, meaning negative interest rates and the MMT mismatch. It has also been climbing GDP per capita in nations such as China and India, the Middle East, and Southeast Asia, where an enormous cultural preference exists for purchasing gold, particularly whenever there are corrections. Quite frequently we prefer to examine gold priced in rupee terms and in Chinese yuan terms. As you can see, in rupee terms for India they have risen considerably. Combine India with China and you get 40% of the global population. Add Southeast Asia and the Middle East, and you have more than 50% of the global population purchasing gold out of affection. The link here is that the highest GDP per capita, or its increase in these nations, has shown continuous purchasing throughout this century. On to the following slide. What matters greatly to me as a money manager and to U.S. Global Investors is that our gold equity stocks are at this point beginning to appear as momentum stocks over the last year; this is fundamental. It occurred in 2002, persisted for five years, and gold stocks dramatically beat the broader market; this is a highly encouraging signal of growth momentum together with revenue and cash flow. On to the following slide. Free cash flow at gold miners has jumped. As this visual shows you, despite the fact that it indicates gold has corrected, the industry's total free cash flow keeps climbing more rapidly than the S&P 500 as a whole; that's one more explanation for why so many of these stocks appear at IBD. On to the following slide. Since 2010, central banks have been buying more gold than they sell. A genuine speeding up is evident from 2020 onward. Notable gains occurred during 2018 and 2019, particularly from China. After Xi Jinping turned into a ruler for life, China went on repurchasing gold, and even during the most recent month China is still displaying strong purchases of the metal, aiming to make its currency seem legitimate as one used around the world. Next, please. Our view is that changes often follow from what governments do; silver provides a textbook illustration. Once the U.S. government designated silver as a strategic mineral for the country in November, hedge funds sharply ramped up activity in the futures market, purchasing silver. A hyperlinked surge carried it to $120 per ounce, after which a major pullback occurred owing to additional government actions, as the CME raised margin requirements by 64%; following that correction, it has now recovered from the lowest point. Next, please. The way we invest is a quantamental method applied to Smart Beta, and it is widely recognized these days that we employ this quantamental method for investing, which demands a wide and thorough grasp of worldwide economic trends, policies, and geopolitical developments. Our Smart Beta 2.0 investment strategy combines sophisticated analytics with choices driven by data, diversification, and risk management. Momentum along with growth in revenue and cash flow matters greatly. A high free cash flow yield also matters greatly for producing stronger cash flow returns on invested capital. What we have discovered is that various assets and various themes need various factors when selecting those stocks within that industry, that category. Moreover, we have discovered that portfolio structure matters greatly when conducting back testing. Next, please. Creating a smart thematic ETF platform: SEA, WAR, JETS, GOAU. Gold has risen 300%, thus GOAU has, since its launch. JETS has performed precisely as we anticipated by beating the NYSE Arca Global Airline Index. Right now, these flags indicate that JETS is listed in Colombia, it is in Mexico, and it is also in Peru. GOAU is the same. GOAU is listed in Colombia, Mexico, and Peru. More recently, SEA is listed in Peru and Mexico. Eventually these will be listed across all of Latin America. I believe it matters that when we examine SEA, it has vastly outperformed the S&P over the last year, even following the tariff spat on April 2, 2025. The entire world dropped by $5 trillion. As the cloud cleared, the S&P finished last year up roughly 12%. SEA was more than twice that. WAR, which is essentially AI for military rebuilding, has enjoyed a spectacular year. I think it is beyond 12 months now, and it is up more than 50%. It has accomplished what it ought to have accomplished, which rests on our models, and we are pleased with that. JETS simply keeps flying above every negative narrative. It dips in the short term when negative sentiment rises, such as the war in Iran. Right away, you notice that airlines this past quarter reported figures that are much, much better than worldwide GDP or domestic GDP. In my view, airlines sit in a sweet spot, functioning nearly as an early signal for worldwide economic activity — much like sea, cargo, which moves 80% of all commodities plus finished goods, the heavy, large items, and genuinely reflects the arteries and veins of worldwide travel. World trade, or equally worldwide travel. Next, please. Improvements observed in WAR and SEA during international conflict get sold off rapidly and afterward continue rising. Completely opposite to what a lot of folks expected. Next, please. Military spending, as we keep pointing out, has reached a fresh all-time peak. Within the coming couple of years it's projected to reach 5% of GDPs, and that is now driving toward $2.9 trillion; figuring out the five industries set to gain is fairly simple. Honestly, our emphasis in those industries has been AI, spanning things like cybersecurity through to building aircraft carriers or fighter jets. What we truly observe is that this century, ever since 9/11 happened, there has been, as you can see, an increase in spending across the globe.

You can also clearly observe that after Xi Jinping turned into a dictator for life, America ramped up what it spends, given that China presently possesses the biggest military on earth, and possibly a greater number of naval vessels compared to the U.S. Next, please. AI, which we have brought up repeatedly during our webcasts, truly matters a great deal for cybersecurity. On a personal level for me, it has likewise proven essential in healthcare. Each year I take the Galleri test, which screens for more than 200 precursors, hunting for proteins, for signs that precede cancer. Then there's the MRI capable of detecting tumors within your body that ordinary blood work might miss. That might represent the stage, the stepping staging for cancer. AI carries huge importance for healthcare and cybersecurity, yet what's crucial here for each person listening is military spending. Back in 1989, beneath George H. W. Bush, America moved in and apprehended Noriega, Panama's president, over narco dealing plus other corrupt activities, yet 23 American soldiers lost their lives. Entering Venezuela proved far more complicated since they had loaded up on plenty of Russian and Chinese surveillance gear, radar gear. What truly matters here is that zero Americans died while we seized Maduro. The notion of deploying AI is genuinely profound when applied to national security. Next, please. This has served as our theme behind the creation of WAR. What we're displaying to you here is how these AI data centers hyperlink information among a Delta Force on the ground, an aircraft carrier, a fighter jet up in the sky, data coming from a satellite, a helicopter, bringing in, extracting Delta Forces. AI's usage will keep being extremely important for national security alongside healthcare. Next, please. We think we hold the products aligned with that, such as recognizing future demand sped up by compute and graphics processing, NVIDIA and chips. Here I stand alongside Jensen, NVIDIA's CEO, the company with the biggest market cap globally. It carries on as our investments in HIVE while it constructs its AI infrastructure. Next, please. We likewise examine certain alternative investments that are illiquid, which wouldn't be eligible for our funds. We take part in them so our nose stays in whatever happens worldwide beyond listed public companies. We managed to join the InvestX series, and that was a $500,000 investment, and now it's aiming to go public, and the projected worth of our investment has grown sevenfold. Such things don't occur. Occasionally there are lumps and losses within this speculation; we as a company, as an investment company, not only put money into our own funds, we additionally put money into some real estate and the creation of new companies. For instance, we launched the creation of HIVE. We also make these other special investments so that we remain within the information flow of where technology heads. Next, please. At this point, I'll hand things over to the very hardworking Lisa Callicotte, who will walk you through more detail on the financials from this quarter that just ended. Lisa?

Thanks, Frank. Good morning, everyone. If you look at the slide that comes next, we're going to begin with the financial highlights. Assets under management averaged $1.63 billion during the quarter that closed on March 31st, 2026, which works out to a 15% gain versus the same period one year earlier. Operating revenues came in at $2.8 million, up roughly 31% from the equivalent quarter in the prior year; net income for the quarter was $2.6 million, equal to $0.23 per share. Turning to the following slide, this one serves as a reminder of the two primary pieces that make up our earnings. The first is operational earnings, made up of our advisory services, and the second is other earnings, which is mostly composed of realized and unrealized gains and losses on the investments we hold. Advisory earnings, as well as investment gains and losses, both move around depending on market forces. On the slides that follow, we're going to dig deeper into the results of our operations. Here, total revenues for the quarter stand at $2.7 million, which represents a rise of $659,000, or 31%, over the $2.1 million recorded in the comparable quarter a year ago. That gain came mainly from higher assets under management, particularly within our gold mutual funds and our gold ETF, GOAU. Operating expenses during the current quarter totaled $2.7 million, a decrease of $322,000, or 11%, driven largely by reductions in employee compensation of $143,000, or 11%, along with a $138,000, or 57%, decline in advertising expenses, which resulted mostly from elevated costs in the prior year tied to the launch of our WAR ETF. Moving to the next slide, our operating income for the quarter ending March 31st, 2026 comes to $88,000. That compares with a loss of $893,000 in the same quarter of fiscal year 2025. Other income rose $1.1 million versus the prior year, mainly because of net unrealized gains on equity securities of $1.3 million this period, against unrealized losses of $50,000 in the same quarter last year. That's a favorable swing of $1.4 million. Other income for the quarter also includes a $1.9 million unrealized gain on the InvestX series investment that Frank mentioned earlier; during the current period, the company recognized an $844,000 tax benefit, versus a tax expense of $137,000 in the quarter ended March 31, 2025. That favorable change of $981,000 stemmed primarily from discrete tax items, among them a federal tax adjustment tied to the tax treatment of certain HIVE convertible securities and a reduction in valuation allowance; back in the December quarter, we recorded a tax expense connected to the tax accounting method change, and we anticipated an offsetting benefit that ended up being recorded in the March quarter. After taxes, net income for this quarter came to $2.7 million, or $0.23 per share — that's a favorable swing of $3.1 million set against the net loss of $382,000, or $0.03 per share, for the quarter ending the same quarter ending FY 2025; on the next slide and the one after that, you can see we hold a strong balance sheet with substantial cash and securities. Turning to the slide after that, our total liabilities come in at $2.9 million. The slide that follows presents our shareholders' equity. Net working capital stands at $36.2 million, and the current ratio is 20.9 to 1. With that, I'll pass things to Holly to discuss marketing.

Appreciate that, Lisa. Okay. On the opening slide of my portion, we're calling attention to a number of happenings that the marketing and investments group here has taken part in of late, plus a single one on the horizon for June. Back in April, Frank Holmes gave a keynote talk for the Swiss Mining Institute conference down in Panama, and while there he was able to sit down one-on-one with leadership from a lot of the precious metals firms held in our portfolios; come May, some of our people went to the Wealthy & Wise Summit, where Frank likewise gave remarks about where gold, defense, and AI meet — three areas we see growing more and more intertwined. Beyond that, we're thrilled to be back representing U.S. Global at Wealth Management EDGE this June, which should mark our third year running at that gathering. That conference gives us a great chance to build relationships with advisors and counterparts throughout the ETF space. Turning to the following slide, you'll find our group representing U.S. Global Investors — a Nasdaq-listed company trading as GROW — at the official Nasdaq Texas kickoff. That event pulled together leaders from business and economics to talk over what lies ahead for innovation, growth, and capital markets in Texas, along with the significant part our state can play moving forward. Onward. The slide after that showcases how dedicated we are to putting out fresh, timely market commentary via our YouTube and TikTok channels — two strong vehicles for reaching both new and existing shareholders. Should none of that be familiar to you, we'd urge you to drop by our YouTube and TikTok pages and hit subscribe on the YouTube channel so you never miss the newest content. Okay, let's continue to the following slide; we make a habit of revisiting which Frank Talk blog entries drew the most readers over the past quarter. Here you can see the leading subjects centered largely on commodities — specifically the prices of oil and gold. Gold and oil have investors' attention in 2026 since each is connected to a handful of big macro forces currently driving markets: worries about inflation, geopolitical turmoil, fiscal shortfalls, and the list goes on. If Frank Talk isn't something you currently receive, I'd strongly suggest signing up at usfunds.com — it costs nothing at all. Last but not least, on my final slide, I'd ask that you keep up with U.S. Global Investors on social media. You can find us on Twitter or X now, LinkedIn, YouTube, Instagram, Facebook, and TikTok. Whichever source you like for news, please give us a look. That keeps you informed about everything happening not just with GROW and our funds, but across the wider market too. Okay. One reminder for everyone listening: should any questions come up today, send them by email to info@usfunds.com, and we'll be happy to get back to you and clear up whatever you might need more detail on. Many thanks for joining us today. That wraps up our webcast covering the third quarter of 2026.