David Johnson - Chief Accounting Officer Rob Sinnott - CEO & Chief Science Officer

Greetings and welcome to the Mannatech Incorporated Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Now, I'd like to introduce our moderator for the call today, Mr. David Johnson, Chief Accounting Officer. Mr. Johnson, you may begin.

Thank you. Good morning, everyone. This is David Johnson, and welcome to Mannatech's second quarter 2015 earnings call. Today, you will hear from both me, and Mannatech's CEO and Chief Science Officer, Dr. Rob Sinnott. Before we begin the call, I will first read the Safe Harbor statement. During this conference call, we may make forward-looking statements which can involve future events or future financial performance. Forward-looking statements generally can be identified by the use of phrases or terminologies such as will, continue, may, believe, intend, expects, potential, should, and plan or other similar words or the negative of such terminology. We caution listeners that such forward-looking statements are subject to certain events, risks, uncertainties and other factors and speak only as of today. We also refer our listeners to review our SEC submissions. At this time, I'd like to make a few comments concerning our second quarter of 2015 operating results. Net income for the second quarter of 2015 was $3.1 million or $1.15 a diluted share as compared to net loss of $692,000 or $0.26 per diluted share for the second quarter of 2014. The second quarter 2015 net sales were $46.7 million, a 0.9% increase from the second quarter of 2014 net sales of $46.3 million. The net sales comparison for the quarter was affected by the loyalty program and foreign exchange. The loyalty program increased second quarter 2015 net sales by $3.2 million, compared to the same period of 2014. Constant dollars net sales for 2015 increased by $3.5 million or 7.6% as compared to the prior year. We use constant dollars reporting to supplement our financial results presented in accordance with Generally Accepted Accounting Principles of United States or GAAP and disclose operating results that had been adjusted to exclude the impact of changes due…

Thank you, David. Good morning to Mannatech's investors, employees, and associates. We are pleased to share our second quarter results with you today. As David Johnson just explained the financials to you in detail, I will only summarize in briefly. Versus second quarter last year, net sales were improved 0.9%, at the same time net income was dramatically improved at $3.1 million versus negative $0.7 million during the same period last year. Cost of sales was reduced by 15.1% as compared to the second quarter of 2014. And we took a much smaller, $0.1 million for obsolete inventory versus $0.8 million during the same period last year. New associates for the quarter increased by 10.2% compared to the same period in the prior year. This was offset by a decrease in new members resulting in a decrease of 18.7% for the combined category of associates and members. Pack sales are up $1.6 million or 21.9% for the quarter. Packs are purchased by new associates and existing associates who wish to build Mannatech business. During the past year we took the following actions to regrew and retain associates and increase pack sales. We launched aggressive marketing and educational campaigns, we initiated additional incentives and we opened new international markets. In summary, we are sticking to the basics of good management and applying best practices globally. We are beginning to see good results. We have programs that are working globally to lift sales and recruiting in certain areas. So it continues to be a matter of transplanting these successes into our other global markets. We are executing on the five strategic mandates that we set for 2015 through 2017. Not all the mandates will be completed this year as some are longer term projects that will have their first major public impacts…

Thank you for listening to Mannatech's second quarter 2015 earnings call. As a reminder company information and filings can be found at the company's investor relations website at ir.mannatech.com or by reviewing the SEC submissions. This concludes today's call. Thank you. End of Q&A: