Good day, ladies and gentlemen and welcome to the Tandy Leather Factory, Inc. Second Quarter 2015 Earnings Conference Call. At this time, all participants are in only listen-only mode. Later, we will conduct a question-and-answer session and instruction will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the conference over to your host for today, Ms. Shannon Greene, Chief Financial Officer. Ma'am, you may begin.

Thank you. Good afternoon. Thank you for joining us for our second quarter 2015 earnings conference call. I am Shannon Greene, Chief Financial Officer of Tandy Leather Factory, and I am joined by Jon Thompson, our Chief Executive Officer, and Mark Angus, our Senior Vice President. Before we start today's call, I call your attention to the fact that these conversations will contain forward-looking statements to the extent we speak today of any future event or make other forward-looking statements. You are reminded of the inherent uncertainties of looking into the future that there are risks to Tandy Leather Factory that could prevent these events from occurring in a manner foreseen. Please see our Form 10-K for 2014 and subsequent forms 10-Q for a discussion of some of those risks. Copies of these documents are available through the SEC's EDGAR system or from our Investor Relations office. Also, statements made today by us as Management of Tandy Leather Factory are made as of this moment and we disclaim any duty to the update of those statements. 2015 is lining up to be a challenging one, some of which is our fault, some not. Our second quarter was disappointing although there are some bright spots. Gross profit margin has held steady against last year's second quarter margin. Sales were strong in the last half of the quarter, but very weak in the first half, which resulted in quarterly sales growth of less than 1%. Operating income decreased by 12%, more details will be provided toward the end of this call. We ended the quarter with $10.8 million in cash and $33 million in inventory. Total assets at June 30th increased $700,000 from year end 2014 to $63.6 million. Now, for the numbers from today's press release, our second quarter consolidated sales…

[Operator Instructions] Our first question comes from the line of Mike Nery of Nery Asset Management. Your line is open. Please go ahead.

Hey, guys. I got a couple of questions. Can you give a little guidance in terms of inventory over the next couple of quarters, what you see in terms of cash needs going in the inventory then how that changes at year end?

Inventory will build some in the third quarter. I think, we ended September last year at $39 million. We are at $33 million at the end of June. I do not see based on everything I am seeing from purchase orders from the buyers, inventory is not going to increase $6 million in third quarter.

Yes. Mike, this is Mark. I am thinking probably, we are going to end up maybe in the 36 to 38 range.

Okay. It is going to cost us $2 million in additional working capital over the next couple of quarters. Capital expenditures for the rest of the year, Shannon, and then also for next year, do you have a sense yet for those?

Capital expenditures, we have got a couple of store moves that are in the works, so another $300,000, $400,000, $0.5 million between now and the end of the year for CapEx. We are analyzing store moves in 2016. If we hold at a regular pace, you are looking at $1 million or so in store fixtures and build out. That may slowdown some depending on how things go the rest of the year, so there is nothing unusual as far as 2016 CapEx. I am not aware of any significant purchases, computer equipments, that kind of thing, just the normal routine. If we continue the store move schedule, you are somewhere $1.5 million, $1.7 million maybe for 2016. If store moves falloff, then obviously you can - the number of moves we do not do [ph] bigger take $100,000 to $150,000 out of each one of those.

Okay. Then in terms of, last year we felt like we had a little too much inventory. This year we feel like, we have a little too little. Looking at next year and I know these things are always hard to predict in terms of the buys, but what do you anticipate being the optimal level of inventory for the Company to have on an average basis or any year basis, however you want to look at it?

I do not know. It is hard to say, Mike. Like, when we found those good purchases before that we were able to run our inventory up, but we knew we would sell those things we had. We had made some good leather buys overseas but I think unless those things come around, we probably won't change a whole lot. Instead what will happen as you know we will make our stores focused on the core of our sales, which is really going back to work and know the basics, so our inventory may not change a whole lot next year unless weather starts being used or you got to have everybody has kind of cut back overseas, because of the expense of the leather. Now, leather is headed back the other way. Maybe it will pick up. People are buying their shoes also means that there is some opportunities in there, but I do not foresee our inventory changing a whole lot next year from what it is, right, what we are saying it will end up being this year.

Okay. Next year, working capital need seem to be about the same, capital expenditures roughly in line with depreciation, so whatever earnings are should be roughly what we do in terms of free cash flow. It looks like we will build a little more cash in the next couple of quarters probably not till the very end of the year, but we have $0.90 a share now in excess cash. In the past the company has done things like payout dividends, have you looked at either a dividend or stock buyback given the company's cash position?

We are analyzing both. I mean, the story, Mike. If that is the logical thing to do unless leather starts falling out of the sky somewhere and we can buy a bunch. That is either one of those options are the logical things to do with excess cash if cash...

Okay. All right. Great. Well, thanks very much and I am glad you guys brought bit the bullet and brought guidance down. You know that sales comps have been really tough this year and sales growth was lower than I think you had originally anticipated, so I am glad you did that. Thanks.

Thank you.

Thank you. [Operator Instructions] I am showing no further questions in queue. I would like to hand the conference back over to Management for any closing remarks.

On behalf of Jon Thompson, Mark Angus and myself thank you for your participation in today's call. Have a good afternoon.