U.S. Global Investors (NASDAQ:GROW) reported a return to profitability in Q3 2024, posting net income of $315,000, reversing the previous year’s loss.
The improvement was primarily driven by gains in investment income, which offset a decline in assets under management (AUM).
The company posted net income of $315,000, or $0.02 per share, compared to a net loss of $176,000 in Q3 2023.
U.S. Global Investors (NASDAQ:GROW) said its net income was bolstered by strong consolidated other income of $995,000, a change of around $1.5 million from the quarter ended September 30, 2023.
The firm did note that average assets under management (AUM) decreased $640 million to $1.5 billion from the comparable year-ago quarter.
Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, highlighted the challenges of improving operating income amidst reduced fund flows, particularly in thematic and cyclical products.
“An inverted yield curve, U.S. presidential election uncertainty, and global conflicts have kept many potential investors on the sidelines,” Holmes said in a statement.
The firm noted that the inverted yield curve, a recession indicator that has historically preceded every U.S. recession since the 1970s, contributed to cautious investor sentiment. “We believe that post-election, investor confidence will recover, and we anticipate industry inflows will improve,” added Holmes.
U.S. Global Investors also announced a monthly dividend of $0.0075 per share through December 2024, with total dividends for Q4 expected to amount to approximately $309,000. The Board authorized a share repurchase plan, allowing for the buyback of up to 14% of outstanding shares. In Q3 2024, the firm repurchased 197,887 shares for approximately $520,000, in line with its strategy to enhance shareholder value.
Holmes drew a parallel to United Airlines, which recently announced a significant buyback program, noting that growing confidence in market conditions had prompted similar actions from U.S. Global Investors. “We will continue to buy back stock whenever shares are priced at or below certain thresholds,” Holmes said.
Despite a record-breaking summer travel season, with approximately 3 million people boarding commercial flights on a single day in July, U.S. Global Investors observed increased short interest in the airline sector. However, the firm is optimistic about future inflows, citing historical trends of airline stocks outperforming in the latter half of the year.
“The second half of the year has historically been stronger for airlines, and we expect the sector to outperform the broader market in the coming months,” said Holmes.
As of September 30, 2024, the firm reported net working capital of approximately $38.2 million, with $27.3 million in cash and cash equivalents, positioning U.S. Global Investors with a strong liquidity position to meet its obligations and continue its investment activities.