Good afternoon, and welcome to the Weight Watchers Third Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Corey Kinger, Investor Relations. Please go ahead.

Thank you to everyone for joining us today for Weight Watchers International's third quarter 2015 conference call. With us on the call are Jim Chambers, our President and Chief Executive Officer; and Nick Hotchkin, our Chief Financial Officer. At about 4:15 p.m. Eastern Time today, the company issued a press release reporting the fiscal 2015 third quarter results. The purpose of this call is to provide investors with some further details regarding the company's financial results, as well as to provide a general update on the company's progress. The press release is available on the company's corporate website located at www.weightwatchersinternational.com. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as a part of the press release. Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. I would now like to turn the call over to Jim Chambers, President and Chief Executive Officer of Weight Watchers International. Jim?

Thank you, Corey. Good afternoon, everyone, and thank you for joining us. My remarks today will cover three topics. First, as Nick will discuss, with cost performance ahead of our expectations, we delivered adjusted earnings per share of $0.39 for the quarter. Second, the December launch of our comprehensive program innovation is fast-approaching. We have been working on key aspects of this launch for over a year, and we are confident it will be a major driver of our company's return to recruitment growth. And third, after the close of the quarter, on October 19, we announced a groundbreaking partnership with Oprah Winfrey. We could not be more excited about the opportunities presented by this wide-ranging and long-term relationship and what this will do to accelerate our company transformation. So let me start by addressing the market-facing impact of our partnership with Oprah. In a few minutes, Nick will provide some color on the financial terms of the relationship. Oprah Winfrey is not only a highly respected and influential public figure, but also an extraordinary human being. Our entire company is proud to have this opportunity to partner with her, and our common view of the future is compelling. I've been personally touched by her candor about her own weight loss journey and her strong belief in our mission, and believe that both current and prospective members will be equally inspired to join her in a journey to living healthier, happier lives. Oprah has a remarkable ability to connect with people and inspire them to realize their full potential, which is uniquely complementary to our powerful community, extraordinary coaches and proven program. Oprah's role with Weight Watchers will be multi-faceted. As a member, over this coming year and beyond, she will candidly share her experiences through a variety of means,…

Thanks, Jim, and good afternoon, everyone. First, to recap some details of our recently announced long-term partnership with Oprah Winfrey; as Jim mentioned, Ms. Winfrey invested $43.2 million to purchase 6.4 million shares of Weight Watchers common stock in a private placement offering. In addition, in conjunction with this strategic collaboration agreement, she received 3.5 million vested stock options. Consistent with our shared commitment to a long-term partnership, her liquidity rights will phase-in over the next five years. Following the transaction, Artal owns 46.3% of Weight Watchers total shares outstanding or 41.9% on a fully diluted basis, assuming all outstanding stock awards vest and are exercised. Artal and Winfrey have entered into a voting agreement, where together, they control 56% on a fully diluted basis, assuming all stock-based awards vest and are exercised. Turning to our Q3 results. In Q3, total company revenue declined 15.6% on a constant currency basis to $273.3 million, and we delivered adjusted operating income of $64.2 million. GAAP EPS was $0.38, and excluding restructuring costs of $0.01 per share, adjusted EPS was $0.39. This was prior; Q3 included a $0.07 per share unfavorable foreign exchange impact. And while still negative, Q3 recruitment trends continued to show stability and were in line with our expectations, and our EPS was better than expected due to continued good cost management by the entire team. The stabilization in our recruitment performance and continued solid member retention are reflected in our year-to-date global paid weeks' trends. In Q3, year-over-year global paid weeks declined 15.7%, an improvement from declines of 17.6% in Q2 and 18.9% in Q1. In Q3, we saw a sequential improvement from Q2 in our paid weeks' trends in our major geographies. In the third quarter, total North America revenues declined 17.9%, with meeting fees down 18.1% and…

Thanks, Nick. The third quarter results reported today reflect a backward look at where we have been in recent years, but not where I believe we are going. We are all aware of the fact that obesity is a major problem in the U.S. and growing globally. We also know that consumers want to do something about it. They want to lose weight and are actively trying to do so. However, in the face of this significant consumer demand, Weight Watchers and commercial plans in general still have low market penetration. Weight Watchers is the leading commercial weight loss plan. Weight Watchers is a plan that works. It is science-based, proven in a multitude of clinical studies and enjoys a strong brand position in consumers' minds rooted in efficacy and trust. This has never changed. Yet, despite this large unmet need and our leading brand position, we have struggled to attract members in recent years. Why? What has changed? Over the last few years, as the world appified and activity monitors experienced significant increases in penetration, our competitive frame shifted dramatically and we were competing for consumer attention with new competitors in a new ways. In 2013, we embarked on a multiyear transformation plan confident that we could address these challenges and turn the company around. Our transformation plan focused on reshaping our company to be consumer-driven, enhancing our insights capabilities and improving how they translate into better marketing and winning product offerings, including targeting ways to leverage our field service provider team, a competitive advantage of tens of thousands of dedicated successful role models who have lost weight on Weight Watchers and kept it off. And we committed ourselves to turn our technology environment from what was a legacy challenge into an enabling asset. As we engaged with our…

We will now begin the question-and-answer session. Our first question comes from Alex Fuhrman of Craig-Hallum Group. Please go ahead.

Great. Thanks for taking my questions and congratulations, a lot of exciting developments here. One thing I really wanted to touch in here is your plan for marketing expense. Obviously, with Oprah joining into a strategic partnership here, it seems like there is an incredible opportunity to market with her. How much of the – as you think about your marketing expense being more or less flat in Q1, how much should we think about that marketing expense being geared towards communicating changes around the new program launch you have? I'm curious to, what kind of a marketing trend you would typically see in a year when you launch a program change versus perhaps, you're maybe willing to put more marketing dollars into your campaign for this diet season knowing that maybe you're going to get a better bang for your buck having Oprah on board? Just trying to understand, kind of where that's coming from, from those two buckets.

Hi, Alex. It's Jim. Thanks for the question. Yeah, we're – to start where you started, we're super excited, obviously, and Oprah will play a role in our upcoming marketing efforts. Without giving away too much commercially sensitive information, I would say that we do have a couple of strong messages to put to the market this year. One is around the program and what is new about it and what it brings and the promise for consumers. And the other is Oprah and her invitation for folks to join her. The only other thing I'll add is I think we have plenty of ammunition in Q1, and I think our marketing is going to be very effective, strengthened by the fact that we have both of those messages and two strong ways to talk to them.

The only thing I'd add to that is, as we've seen in addition to our own marketing efforts, buzz and word of mouth can be such a powerful tool for this brand, and we're very confident with having such wonderful news. That can certainly play a major role in our 2016 efforts also.

Great. That's helpful. Thanks. And then, it sounds like there is a lot of optimism about your ability to perhaps get back to positive recruitment growth in Q4 or next year. It doesn't seem like that's reflected certainly in the price of your debt. What is the thinking? I mean, you mentioned that with the growth in recruitment you could have a really strong generation of free cash flow here. I mean, is there thought towards maybe being proactive and pre-paying some of the B2s, while they still remain cheap? Or are you going to kind of allow some cash to accumulate on the balance sheet after you get through the B1 repayment and then kind of reassess things this time next year?

Well, thanks for that. Look, it's a great question and we are thrilled to guide that we'll be returning to, more than likely, returning to positive recruitment growth in Q4. And we expect to have positive recruitment throughout 2016. We've got the same high margin business model we've always had, and we've taken a lot of costs out of this company. So as we return to recruitment growth, we throw off a lot of cash. And we look forward to using it.

Great. That's really helpful. I look forward to seeing the new changes in a few months.

Our next question comes from R.J. Hottovy of Morningstar. Please go ahead.

Thanks. First question I had was with respect to investment, and particularly, the healthcare and the tech investments you guys have been making. Nick, I appreciate you probably don't want to give away your 2016 CapEx guidance for the year or even just the investment spending, but just kind of maybe give us a little bit of color where you stand on the technology and the healthcare investments as we look into the 2016 and potentially beyond that?

Yeah. No, thanks, R.J. Look, I mean throughout this transformation we've had stringent cost controls, but we've invested where we've needed to, to build for our future. So when you look at what's been driving our historically high CapEx, the tech transformation and our retail reinvention, our footprint reinvention are behind this. So in 2016, we'll continue to invest in the business for growth, but we don't expect 2016 CapEx to be materially higher than the $35 million or so we're guiding to for 2015.

Thanks. Also had a product-related question; as I was playing around with the Weight Watchers sales website earlier this weekend, I noticed that there was a – at least for a few days ago, there was a test for at-home pre-portioned meals in a partnership that looks like with Chef'd, and I just kind of wanted to get your sense on what that might be going forward? And kind of your plans for at-home pre-portioned meals and the opportunity that, that partnership might open up?

Hi, R.J. It's Jim. I think this is first and foremost a reflection of the amount of innovation and the work we are doing to understand how best to serve our consumers and our members across a broad range of activities. It is real early days for the partnership that you referenced, but the idea here is to provide convenience oriented healthy food choices, again, consistent with the direction we're heading in, in ways for consumers that they know this is going to fit their point budget for the day. So that's the idea. Again, early days. And it's way too early to kind of predict how far and in what way we'll take that forward.

Thanks.

This concludes our question-and-answer session and also concludes our call for today. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.