David Johnson - Chief Financial Officer Al Bala - President and Chief Executive Officer.

Greetings and welcome to the Mannatech Incorporated First Quarter 2016 Earnings conference call. At this time, all participants are in listen-only mode. As a reminder, this conference is being recorded. Now I'd like to introduce our moderator for today's call, Mr. David Johnson, Chief Financial Officer. Mr. Johnson, you may begin..

Thank you. Good morning everyone. This is David Johnson, and welcome to Mannatech's first quarter 2016 earnings call. Today, you will hear from both me and Mannatech's President and Chief Executive Officer, Al Bala. 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, expect, potential, should, could, would, anticipate, estimate, project, predict, hope, feel and plan, or similar words or the negative of such terminologies.

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 will make a few comments concerning our first quarter of 2016 operating results.

Net income was 0.6 million or $0.21 per diluted share for the first quarter of 2016 as compared to 1.1 million or $0.40 per diluted share for the first quarter of 2015. Our first quarter of 2016 net sales decreased $3.7 million or 8.3% to $40.7 million compared to net sales of $44.4 million for the first quarter of 2015.

The sales comparison for the quarter was affected by foreign exchange rates. In the first quarter of 2016, we continued to face foreign currency headwinds, especially in our major currencies of the Korean won, Australian dollar, New Zealand dollar, South African rand, British pound and euro.

On a constant dollar basis, which is a non-GAAP financial measure net sales for the first quarter of 2016 decreased by $1.6 million or 3.6%, as compared to the prior year.

We used constant dollar reporting to supplement our financial results presented and according to generally accepted accounting principles in the United States or GAAP and disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars.

We used this non-GAAP measure to provide investors with additional perspective on trends. Those occupying and associate position in our network decreased for the quarter by 6.7% compared to the same period in the prior year.

The number of new independent associates and members for the first quarter of 2016 was approximately 23,800 as compared to 25,500 in 2015. The total number of active associate positions held by individuals in our network based on a 12 month trailing period was approximately 218,000 as of March 31, 2016, as compared to 230,000 as of March 31, 2015.

For the first quarter of 2016, our operations outside of the Americas accounted for approximately 60.7% of our consolidated net sales, whereas in the same period in 2015 our operations outside of the Americas accounted for approximately 59.2% of our consolidated net sales.

Mannatech continues focusing on international expansion throughout the world, our Company's new international executive leadership team and strong global associate leaders, well equip the Company for growth in these regions and are intended to be the driving force behind increasing revenue for the long-term.

Asia Pacific net sales decreased by $1.3 million or 5.7% to $21.4 million in the first quarter of 2016 as compared to $22.7 million for the same period in 2015. In constant dollars net sales for the first quarter of 2016 would have been $22.7 million.

The currency impact was primarily due to the depreciation of the Korean won, Australian dollar and New Zealand dollar. In Europe, Middle East and Africa or EMEA, net sales decreased by 0.3 million or 8.3% in the first quarter of 2016 to 3.3 million as compared to 3.6 million for the same period in 2015.

In constant dollars, net sales for the three months ended March 31, 2016 would have been $4 million. The currency impact was primarily due to the depreciation of the South African rand, British pound and the euro. When first quarter of 2016 is compared to the same period during 2015, recruiting of associates in the EMEA region increased 16.4%.

Americas net sales decreased by $2.1 million or 11.6% in the first quarter of 2016 to $16 million as compared to $18.1 million for the same period in 2015. The decrease was due to a decline in active independent associates who have purchased products and/or a pack in the Americas region during the past 12 months.

When the first quarter of 2016 is compared to the same period during 2015, recruiting of associates in the Americas region increased 13.6%. Our operating income for the first quarter of 2016 was $0.5 million as compared to an operating income of $2.5 million for the first quarter of 2015.

During the first quarter of 2016, selling and administrative expenses decreased to 8.1 million as compared to 8.8 million during the first quarter of 2015. As a percentage of sales, selling and administrative expenses were 20% and 19.9% for the first quarter of 2016 and 2015 respectively.

Other operating costs increased to $7.6 million or 18.6% of revenue from $6.6 million or 14.8% of revenue during the first quarter of 2015. The increase in operating costs was largely attributed to the buildup, to the MannaFest 2015 event in Dallas that occurred at the beginning of our second quarter.

The buildup to the event included the development of 13 new products as well as a global rebrand and a new back office technology suite for our independent sales associates.

In reviewing the balance sheet, at March 31, 2016 our cash-and-cash equivalents increased by approximately $1.6 million to a balance of $33.6 million as compared to $32 million at December 31, 2015.

For the three months ending, March 31, 2016 cash flow from operation activities was 2.2 million inflow as compared to a 1.2 million inflow during the same period in 2015. We invested approximately $0.7 million in information technology and leasehold improvements.

In summary, our net cash inflow for the first period of 2016 was approximately 1.6 million as compared to a net cash inflow of 0.4 million for the same period of 2015. Our working capital, defined as total current assets, less total current liabilities, increased to 24.3 million as compared to 23.5 million at December 31, 2015.

Our net inventory balances increased by approximately $2 million to $11.2 million at March 31, 2016 as compared to $9.2 million at December 31, 2015. Our total current liabilities increased by $4.4 million to $30.8 million at March 31, 2016 as compared to $26.4 million at December 31, 2015.

Finally, during 2016 we did not pay dividends and we did not repurchase shares in the open market. At this time, I will turn the call over to Mannatech's CEO, Mr. Al Bala..

Thank you, David. Hello everyone and thank you for joining us on our first quarter earnings call of 2016. I am Mannatech's CEO and President, and I would like to discuss Mannatech's first quarter of 2016. The first quarter represented a final step in Mannatech's two years effort at completing a near total makeover of the company.

We invested heavily in creating a new Mannatech with the aim of increasing revenues and operational profits. By introducing new products, new technology, a complete rebrand and the opening of new markets, that in total should enable our independent sales associates to build stronger and more sustainable global businesses.

In the past, Mannatech has rarely introduced more than one new product per year. But this year, we introduced 30 new products, including a new consumer friendly fat loss system and a new essential oils product line.

We expect that our investment into these products will open up new audiences for Mannatech and help create a bridge between new customers and our existing customer base.

We believe that Mannatech fat loss system product is to be unique among other weight management system, due to our focus on body composition and fat loss while departing from the traditional scale weight oriented programs that our competitors depend on.

This product strategy is singular to Mannatech as our product, our experts and glyconutritional technology could prove to be quite disruptive to a weight management industry that has gone stale -- without models, scale weight and BMI based programs.

This is an enormous product investment that we feel may provide a strong revenue stream for the company going forward. Of similar, it's not a greater importance, is our rebranding effort in which we invested heavily during the first quarter.

Mannatech's rebrand has impacted nearly every area of our operations in order to be more modern, global and competitive. New branding changes included a brand, a new brand identity, focused positioning, product packaging, sales tools, apparel, renovation of the corporate office and updates to all of our online resources.

The new brand also provides a substantial and compelling story to support associates' efforts to share the product widely.

Our new tagline, transform your life and other element of the rebrand were met with great enthusiasm in previews with our top sales leaders and during our official reveal of the new brand at MannaFest 2016 in front of a global audience of associates.

Another investment we committed to do in a first quarter was our new back office technology suite for our sales associates, we called it My Mannatech.

My Mannatech is expected to be a state of art business management system that will help our sales associate to build a business in a most social, mobile and global manner using our new product and a new rebrand. We believe that My Mannatech platform will make Mannatech one of the most technologically advanced Company in the direct sales industry.

During the first quarter, we also officially opened operations in Colombia. Again this required a substantial investment to finalize in mid February. This is an important expansion for Mannatech as Colombia is a doorway to South America and gives Mannatech a strong foothold into an entire new continent for the company.

We have a rapidly growing Hispanic associate base in the U.S. and Mexico and the opening up Colombia has energized these individuals to grow their business and support a strong opening in that country. We also continue our investment in building future opportunities in China.

During the first quarter, our efforts in China began to take focus as we work to establish a valuable business model, a marketing strategy and other infrastructure milestone which are needed for opening a non direct selling business in China later this year.

Mannatech's first quarter was an important time for the company, as we finish ramping up and setting our course, aiming as positive growth through continued innovation and market expansion.

Our ability to contain cost and expense management has been a powerful tool for the company as we strive to continue our tight oversight of operations in order to promote shareholder value and long-term stability. We thank you for joining us in the call today. .

Thank you for listening to Mannatech's first quarter 2016 earnings call. As a remainder company information and filings can be found at the company's Investor Relations Web site ir.mannatech.com or by reviewing SEC submissions. This concludes today's call. .

End of Q&A:.