Pat Watson – Senior Vice President and Principal-Corporate Communications, Inc. Jeff Rosenthal – Chief Executive Officer Jared Briskin – Senior Vice President and Chief Merchant Scott Bowman – Senior Vice President and Chief Financial Officer

Stephen Tanal – Goldman Sachs Seth Sigman – Credit Suisse Rafe Jadrosich – Bank of America Camilo Lyon – Canaccord Genuity Peter Benedict – Robert W. Baird David Magee – SunTrust Patrick McKeever – MKM Partners Sam Poser – Susquehanna Rick Nelson – Stephens Aldon Taylor – Deep Roots Capital

Ladies and gentlemen, thank you for standing by. Welcome to the Hibbett Sports Second Quarter Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Friday, August 18, 2017. I would now like to turn the conference to Pat Watson from Corporate Communications. Please go ahead, sir.

Thank you for joining Hibbett Sports to review the company’s financial and operating results for the second quarter and first six months of fiscal year 2018, which ended on July 29, 2017. Before we begin, I would like to remind everyone that management’s comments during this conference call not based on historical facts, including those in response to your questions, are forward-looking statements. These statements, which reflect the company’s current views with respect to future events and financial performance, are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that the company’s future results may differ materially from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued earlier this morning, in the company’s annual report on Form 10-K and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information. Lastly, I would like to point out that management remarks during this conference call are based on information and understandings believed accurate as of today’s date, August 18, 2017. Because of the time-sensitive nature of this information, it is a policy of Hibbett Sports to limit the archived replay of this conference call webcast to a period of 30 days. I’d now like to turn the call over to Jeff Rosenthal, Chief Executive Officer. Please go ahead, Jeff.

Thank you, and good morning, everyone. Welcome to the Hibbett Sports second quarter earnings call. I have with me this morning, Scott Bowman, Senior VP and CFO; Jared Briskin, Senior VP, Chief Merchant; and Cathy Pryor, Senior VP of Store Operations. Net sales for the 13-week period ending July 29, 2017, decreased 9.2% to $188 million compared with $206.9 million for the 13-week period July 30, 2016. Comparable store sales decreased 11.7%. We experienced a very difficult retail environment in the quarter with a significant decline in transactions and resulting in pressure on gross margins. Expenses were well controlled while maintaining proper staffing and customer service level in our stores. We expect the external environment to remain challenging, although we are encouraged with the progress we are making on our internal initiatives, most notably our new e-commerce website. Our early e-commerce sales have exceeded our expectation, and user feedback has been very positive. We will continually to – we will continue to aggressively grow our online business while continuing to improve our source to ensure a great overall customer experience. We have successfully relaunched our loyalty program to reengage with our existing customers, and the feedback has been very positive. We must engage with our customers more frequently to provide excellent service, both in stores and online. The acquisition of new customers has just begun, and we are encouraged that with our new website and initiatives, this puts us in a new place. Early results show our loyalty membership increased with such an early stage is promising. New customer acquisition is very critical to our success for the future. In just three weeks, we have already seen many customers from other parts of the country that we do not have stores. There is no doubt that with our small market strategy and our omni-channel capabilities that we will be successful in the future. Through the quarter, Hibbett opened six new stores, expanded four high-performing stores, closed eight underperforming stores, bringing the store base to 1,080 in 35 states as of July 29, 2017. Even though this has been a difficult retail environment, we have taken many steps to start improving our results. We have invested in our stores, people and technology for our long-term strategy and believe it positions us well with our customers and our shareholders for the future. Our team is working extremely hard and making sure that our customers have the greatest service and the capabilities of purchasing products both in store and online. I would like to thank all our associates for their hard work. All of this would not be happening without them and their expertise, knowledge, teamwork, extended hours and dedication to Hibbett Sports to ensure positive results. I now will turn the call over to Jared Briskin, Senior VP, Chief Merchant, to talk about our merchandise trends.

Good morning. Thank you, Jeff. Second quarter was a very difficult quarter. Soft traffic patterns, increased distribution, a heightened promotional environment and difficult launch compares lead to significant declines. Sports specialty stores continued to be challenged the most as increased distribution and intense promotions are impacting down trending businesses, such as performance apparel and team sports even further. Athletic specialty stores were slightly better, but difficult launch compares did not offset the declines in performance categories. Fashion specialty stores were severely impacted by difficult launch compares. Apparel was down low double digits due to impacts in performance apparel, team sport-related products and socks. From gender perspective, women’s and kids were both down double digits while men’s was down low single digits. The license business was down double digits. The core fan license business continues to be a very challenging, however, we are seeing significant growth in license for fashion. Our team sports business was down double digits. Cleated business was down high single digits and equipment was down double digits. Footwear was down high single digits for the quarter. While we had significant gains in both access to new models as well as allocations from Nike, Jordan, Adidas, Puma and New Balance, the previous year launch compares were too difficult to overcome. Men’s was down low single digits while women’s and kids were off double digits. Inventory was managed well despite the sales challenges as our merchants fine tune assortments and our vendor partners continue to increase their level of support on our business. Aged inventory at the end of the quarter was much improved from the end of first quarter, but still up to last year. The emphasis on improving the age of our inventory as well as the intensified marketplace promotions will continue to put pressure on margins. I’ll now turn the call over to Scott Bowman to discuss our financial results.

Thanks, Jared, and good morning. For the second quarter, total sales decreased $19 million to $188 million, a decrease of 9.2% over the prior year. Comp sales were down 11.7%. By month, comp sales were negative 8.4% in May, negative 13.1% in June and negative 13% in July. Gross profit rate decreased 404 basis points in the quarter. Product margin decreased 264 basis points, mainly due to markdowns taken to liquidate excess and aged inventory, costs incurred to transition to an enhanced loyalty program and freight cost incurred on store-to-home and e-commerce orders. Logistics and store occupancy expenses increased 1.5% in the quarter and increased 140 basis points as a percent of sales due to deleverage associated with lower comp sales. SG&A expenses were tightly controlled in the quarter and dollars were flat versus the prior year. As a percentage of sales, SG&A expense increased 264 basis points due to lower comp sales. Depreciation and amortization increased 30% from last year and was up 96 basis points as a percent of sales. This was mainly due to the rollout of our new POS system and investments in our omni-channel initiative. Operating loss for the quarter was $5.2 million versus operating income of $10.1 million last year. This translated into a net loss of $0.15 per share in the quarter versus earnings per share of $0.29 in the same period last year. From a balance sheet perspective, the company ended the quarter with $53 million in cash versus $46 million last year with no borrowings outstanding on our revolving credit facilities. Inventory decreased 5.6% from last year and was 7.5% lower on a per-store basis. We spent $6.6 million in CapEx for the quarter, which included spending on our omni-channel initiative, continued investments in new and existing stores and other projects to improve the business. Also, the company repurchased 283,000 shares in the quarter for a total of $6.9 million. At quarter end, we had approximately $229 million remaining under the existing purchase authorization. Based on the results for the second quarter, we are updating our full year guidance with the following changes. We expect full year earnings per share to be in the range of $1.25 to $1.35, which compares with previous guidance of $2.35 to $2.55. Comparable store sales are expected to be in the negative mid- to high single-digit range, which compares to previous guidance in the range of negative 1% to positive 1%. This assumes that current run rates for comparable store sales will remain very challenging, but will benefit somewhat due to the addition of e-commerce sales. For gross margin, we expect a reduction of 250 to 285 basis points compared to last year, which compares to previous guidance of a reduction of 55 to 75 basis points. This reduction assumes ongoing efforts to improve our aged inventory position, expectations of a highly promotional environment and continued deleverage of logistics and store occupancy expenses due to lower comp sales. With that update, operator, we are now ready for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Stephen Tanal with Goldman Sachs. Please proceed with your question.

Hey. Good morning, guys. Thanks for taking question.

Sure.

I guess, just the one thing I wanted to understand is sort of the same-store sales outcome versus the preannouncement pretty late in the quarter. If we’re doing some very simple math that I’m sure is wrong by sort of just thinking about all those being equal, it would sort of imply the last five days are off very significantly, kind of like 40%. Is that even close? How did the quarter end? And what ended up being so different in terms of expectations?

They weren’t off that much, and I think what you’re seeing is just the volatility that we’ve seen here lately. And typically, when we get into the back-to-school time period, it’s extremely volatile based on tax-free ships, but more so this time just based on when school’s actually opened in all of our geographies. So I wouldn’t read a lot into that. They did definitely get worse, but that’s just really the volatility we typically see during this period.

Got it. And I guess, you launched e-commerce right around that time, and it sounds like it’s doing better than expectations. I imagine the contribution is probably immaterial to the quarter itself, but how are you thinking about that in the context of the back half and the comp guide?

Yes, you’re correct. It started off quite well for us, so we’re very pleased with the functionality and the activity. You’re right, it didn’t really impact the second quarter. As I look to the back half, my expectation is that, obviously, we’ll benefit more in the fourth quarter based on compares from last year and holiday, and we’ll, no doubt, ramp up e-commerce between now and then. So more of an impact in Q4. What percentage that is remains to be seen.

Understood. And lastly, for me, just on SG&A, obviously, very tightly controlled. I wonder if there’s any thing kind of onetime that we should be thinking about as we model out the forward. Is there an incentive comp accrual, reversal or anything like that that we should keep in mind?

There is, yes. So we did definitely rebalanced instead of comp accrual, so that did come down quite a bit. New store costs were down a little bit as well and some other miscellaneous items.

Got it. Okay, thanks a lot.

Thank you.

Thanks, Stephen.

Our next question comes from the line of Seth Sigman with Credit Suisse. Please proceed with your question.

Okay. Thank you, and good morning. Bigger picture, as you guys assess what’s happening in the industry here, obviously, you’re not alone in the slowdown. But in your view, is this a competitive issue? Is this a product issue? Is it a demand issue? And in general, what do you think needs to change here for growth to reaccelerate?

I don’t think – I think we’re positioned very well, especially being in small markets and stuff. I think we were at a huge disadvantage not being able to sell online and early results in the first three weeks. We’re very encouraged that, that will help bridge that GAAP. I do think that there’s some issues with products being over distributed. I think right now, with – especially with people using their mobile phones so much that everything is – all eyes are on everyone, and I do think there are some things or some headwinds out there with the consumer on just spending in categories. But as we see back-to-school with some of those things, we do see some of those things picking up.

So as a follow-up, a question on your pricing strategy. You’ve always been a premium price player. It definitely feels like the consumer is more focused on price as price transparency increases. You’ve probably heard some of your other competitors talk about improving their value proposition. How do you think about the evolution of your pricing strategy?

I think we continue to look from a pricing strategy perspective. We’re very focused on price value versus necessarily price, and we feel like there are opportunities to provide value to the customer without necessarily going downstream from a price perspective. Our focus from a product standpoint is going to continue to be on scarcity, premium products and products that are aspirational in certain categories. In certain categories, where we potentially are not able to provide those products, then we certainly will have to compete.

So at this point, is there a view that you may need to reset pricing in certain parts of the business?

There is not at this time.

Okay, thank you.

Our next question comes from the line of Rafe Jadrosich with Bank of America. Please proceed with your question.

Hi. Good morning. It’s Rafe. Thanks for taking my question. You guys highlighted the really challenging environment, and Jeff, you just mentioned some over distribution. Just in the past, when you’ve gone through a – if you have gone through a similar environment, how long has it taken for the market to return to growth? And then what has been the catalyst for the market to be like a little bit more healthy? Did the vendors have to pull back on distribution? Kind of where are we in that process?

Yes. I do believe that they do have to pull back on distribution. I think some things are too wide, and I think we’re seeing a lot of that starts. I think they are making some products more scarce out there. I think innovation is really key. And I know the last time, which has been quite a few years, that it really got this tough. A lot of the innovation kind of stopped and then it picked up. For example, this week, we looked at Nike next spring or late summer, and really a lot of innovation, a lot of change and sometimes the vendors have not been as quick as they need to be. Things don’t last as long as they used to be. Some models, they get in and then they’re done much quicker than they ever have. So a lot of them are doing these speed propositions where they’re coming to the market a lot sooner. The vendors have to get much quicker on bringing new products faster to the marketplace because people want new. And when you do new models much quicker, it seems like it resonates with the customer.

Okay. It’s really helpful. And then one more follow-up. Just kind of in light of the more challenging environment, how should we think about your store growth over the next few years? Do you expect to pull back a little bit?

Yes. I think we will pull back. We’ll be a lot more selective than we ever have been. We’re a little bit more flattish now. The beauty of our model having short leases, we usually – we can usually – every year, we’re hitting about one-third of our leases. So we have a lot of flexibility. We don’t sign long-term leases. So we just want to make sure that we have a healthy model, so we can be the most profitable that we can.

Is it – is flattish or low-single digits fair for going forward?

That’s fair.

Okay, thank you.

Our next question comes from the line of Camilo Lyon with Canaccord Genuity. Please proceed with your question. Sorry, Mr. Lyon, please go ahead.

Can you hear me?

Yes.

Okay. Sorry about that. So I had a couple of questions. Number one, can you give – Jeff, can you give a little bit more detail around the categories in which you’re seeing the innovation come in next year? What you’re excited about? Is it more basketball-related or casual or running? And then could you give a little bit more detail about the category performance in the quarter? What, within footwear, took another leg down? Was it basketball, running or casual? And then I have a follow-up.

Yes. This is Jared. I mean, certainly, what we were seeing from the vendors is certainly more of a focus on speed, more of a focus on change. So there are some exciting propositions that are coming across most categories. At this point, we’re most excited about what we see more from a lifestyle arena as well as in the running category. Current trends from a second quarter perspective, we’re certainly impacted by basketball. That’s our largest launch category throughout the second quarter, and it is very impactful in our kids business in particular. So the lack of some of our high-performing models that are not offered in kids really had a significant impact on the kids business that it’s so driven by launched product in basketball during the second quarter.

Okay. And then you talked about an early positive start to the e-commerce launch. I’m wondering – I think you said you had three weeks of that being live. I’m wondering if you are able to tell if there was any sort of leakage from your store business when that went online. I’m just trying to assess if there’s been just a transfer of the sales or if it’s been truly additive to the business thus far. I know it’s early days, but any sort of information or sort of color? And that would be greatly appreciated.

Yes. I think it’s a little early to tell. I do – I am encouraged because we are seeing a significant amount of our sales being from other places that we don’t have stores, which is very encouraging. I know just the first week of being online, we increased our MVP loyalty membership by over 11,000 people just in that first week, which gives me a lot of confidence that we’re acquiring new customers. And also, it gives us the opportunity because I think we’ve obviously have disappointed some of our customers over the years on not having an e-commerce presence. And a lot of the feedback we’re getting for – from the customers, both from our loyalty program and being able to sell online, is that we’re reengaging, and they’re so happy because they want to shop both ways. But it’s really a little too early to tell we’re being cannibalized or not.

Okay. Thanks guys, good luck in the back half.

Thank you.

Our next question comes from the line of Peter Benedict with Robert W. Baird. Please proceed with your question.

Hi, guys. First question is on kind of the signature kind of shoe launches and whatnot. I think, Jeff, you may have mentioned that you’re excited about some innovation next year. But Jared, you had mentioned that the launch schedule is a little off this quarter. Can you frame for us maybe how many meaningful launches are there in a year for you guys, whether it be across Nike and some any other brands, just for the real signature footwear? And how is that compared versus last year? And then as you think about next year to the degree that you know, is there any sense that the vendors are going to come out with maybe fewer or more? And then how about the depth of what they’re putting behind those? Just kind of a broader question, but curious your thoughts on that?

Yes. I think there’s a lot of volatility to everything that you’re mentioning. I think if you look from a year-over-year basis, certainly there are more today than there have been historically. I think the biggest impact to it is with so many that there are with the customer being so connected digitally and so connected to their phone, the customer really understands what’s coming. And I think they can really understand how they want to plan their purchases for a lot of those products, specifically to the second quarter, and the second quarter certainly is a value – excuse me, a valley with regard to traffic. It really was a model versus model comparison this year versus last year. Last year’s models were significantly better models even though we had more allocations along with more access points and more launches during the second quarter. In some of those times where there’s a valley from a traffic perspective, the expectation from the customer is those models are going to be that much stronger. And my view point is I think the number of launches, I think, will tighten up as we move forward with a little more focus on the quality of those launches, and certainly our hope is that some of them will be less broad than they are today.

Terrific, that’s helpful. I guess, my other question, maybe to Scott, can you give us a sense as you’re thinking about the product margins and some of the pressure you’re seeing there, how we kind of parse that out, promotions/markdowns versus kind of the e-commerce impact? How do you think about that?

I think the decline in product margin will be mostly driven just by the promotional environment as well as markdowns to really get rid of our excess and aged inventory. That will be the key driver.

Okay. And then lastly, just on your capital plans, the CapEx guide still remains in place. But how do we think longer term? I mean, it sounds like you could have some fewer stores, maybe – in some of the out years, maybe not really net grow the footage much at all. How should we think about kind of an underlying CapEx? Maybe as you think out towards 2018, 2019 are there any big spends that we need to think about?

No real big spends on the – in the near term. As a rule of thumb, just for modeling purposes, 2% to 2.5% of sales is a pretty good number to use looking forward for the next three to five years.

Okay, great. Thanks guys.

Thanks.

Our next question comes from the line of David Magee with SunTrust. Please proceed with your question.

Yes. Hey, everybody.

Good morning.

Good morning.

A couple of questions. One is, Jeff, when you mentioned the wider distribution is being a factor here of late for the sector, is there any analysis that you guys may have done as far as the stores, specifically in the relative competitive sets to tell that maybe stores that are more isolated to have better numbers? Or is it – or is this an issue that the distribution occurred online and so as some stores?

Yes, I think not necessarily online even though that does have an impact. I do think as some of our vendors have open distribution and added new points of distribution side definitely have seen an impact on those particular markets. So when that happens, unless there’s a unique differentiation in product, we do see an impact.

Okay. Thank you, Jeff. And then secondly, the – I know it’s early with the online in the e- commerce business there, what is your sense for what the purpose potential or their composition might be over time?

Composition from amount of business in each category? Or…

Well, I’m sorry, the percent of the online business that might be picked up in store, thinking that that’s the more profitable. Is that a number that could be half the business eventually? Or is it just early to really assess that?

I think right now, David, it’s a little bit too early to tell. We did take a lot of steps along the process of building this capability to make sure that our stores were tied into the e-commerce site. And so although there maybe some cannibalization, there’s going to be some benefit from having a website with our stores. So I think we’ll see that play out. In terms of looking out, I think, I’m probably a little biased, but I think the team did an outstanding job of the look and feel of the website and some of the functionality in the content to the point where I think we’re very close to our peers and maybe above some of our peers in some cases. So I think we definitely put our best foot forward. And so that being the case, there’s no reason that we can’t approach the penetrations we see with our peer group over time.

And I think just the online piece gives us the opportunity to drive more footsteps to our stores. With the visibility and the marketing, it also gives us visibility to our stores. For example, they might not know that we carry something in a certain store now that we have that, being able to talk to the customer more with unique visitors and increasing our acquisition of customers. I think it can help drive the business. But I agree with Scott, I believe we’ll be in with where our peers are, if not greater at some point.

Okay, fair enough. Thank you guys.

Thank you.

Our next question comes from the line of Patrick McKeever with MKM Partners. Please proceed with your question.

Thanks very much. Jeff, you mentioned orders coming from states or areas where you don’t have stores. So my question is, how are those orders coming to you online? I mean, do you have a sense of what may be driving that transaction? Is it assortment? Is it price? I mean, I would think at this juncture, your search prominence would be pretty low and that it would take some time to build that. So I mean, how do you feel you’re reaching – how are you reaching that customer outside of your trade area when it’s just so – you type in Nike, whatever, it’s just – it’s so crowded and there are a lot of others that rank higher than you on the search kickback?

Sure. We’ve spent a lot of time on SEO, and we just – even before we got in here, we’re pulling up certain styles and we are already on some things. We’re already on Page 1, which is incredible. I would never have believed that we would be there that quickly. But we’re also doing paid search. For example, if you pull up Nike Huarache, we show up on the front page or the first page. So we are very conscious of trying to acquire new customers. We will be doing more paid searches. But a lot of it – it’s not about price, it’s about having the best and premium product that we can have and driving them to make sure that we have a great experience. And our stores have done an excellent job of fulfilling orders, and we’re fulfilling orders growth from our stores in our DC. Our stores are checking orders at least three times a day, and they’re doing an excellent job on responding and getting the product out at a very quick manner. So I think we have a huge advantage, especially as many stores as we have that we can get product to customers much quicker than a lot of our competition can.

And then just on Nike and the news a few weeks ago that they were going to start testing direct selling on Amazon. It has had a big impact, I guess, just on investor perception of the industry and whatnot. And it certainly come up in some of the other – some of your competitor conference calls and reports. So my question is just, what are your thoughts on that development and how it might impact your business? And then secondarily, I mean, are you seeing vendors, not just Nike, but some of the other big brands being more aggressive with their direct-to- consumer offers? Just how do you deal with that going forward?

When you talk such as Nike selling to Amazon, I think, right now, they’re doing more of the commodity-type items and it’s really not their more sought-after products, and that’s mostly what we do. So I think it will have a minimal impact. Now if they do decide to sell the premium product to them, it would be a lot bigger impact. But as long as they keep it tight with their premium partners and other retailers, I think it will be fine. We have seen, obviously, the vendors have picked up their digital presence and how much they sell. It will affect us some, but we also – a lot of people today would like to shop many brands. They would like to compare a Nike shoe to an Adidas shoe or Under Armour or New Balance or Puma or any of those things, where Nike is a one shop. So I think we do have some advantages, plus still a lot of people like to go to stores and check out what the assortments are in one way. Most customers today will look online and do a little bit of research before they come to a store, and I think having that ability to be able to sell and also for customers to do research, we are now in that game where we haven’t been.

Got it. Thank you.

Our next question comes from the line of Sam Poser with Susquehanna. Please proceed with your question.

Okay. Thank you for taking my question. I guess the first question is, what’s the status on getting a mobile app because a lot of people are shopping using that? I believe your website is mobile-friendly, but what is the status on the mobile app?

Sure. We’re already in the process. We’re working on it as we speak. We are doing a lot of homework and do – it’s in the development stage, and we think it’s a huge opportunity. I think we can have leading technology that we could be ahead of our competition in it, and we think it will probably be the beginning of first quarter or later this year.

Okay, thank you. And then I guess, Jared, from a footwear and apparel brand mix, I mean, I asked this question of another retailer just a moment ago, are you counting on too much of the big brands? And maybe are there some heritage brands that maybe you passed on in the past that may provide some opportunity for you where you haven’t? I mean, are you doing too much of the same – are you going after the same stuff where people maybe not be responding to it as much? And do you need to go back to some other brands you may have not played with good heritage story to tell because that seems to be considering to work in the lifestyle products?

Yes, I mean, we’re looking across the whole spectrum for newness and how we can really change and react to speed. Certainly, a lot of volatility in the marketplace right now. But when we start to look at what we feel we’ve changed from an assortment perspective, just the back half versus the back half with regard to mix, we’re fairly excited about the changes we’ve made. Certainly, we’ll have to see if they resonate with the customer and the backdrop of the marketplace and volatility is there. But we are very, very focused on moving and changing as fast as we possibly can. So yes, we’re looking at all of those avenues, Sam.

Thanks. And then, Scott, I just want to clarify on the stores, when you say – are talking about net store openings in the conversation about that low single-digit number? Or are you talking about store openings prior to closings in the – to response to prior question?

What we meant was we’ll be flattish on net new stores, net of closings.

And so what would be your – I mean, I guess, the question is, then how many new – I mean, I realize it’s – it doesn’t matter, but how many new stores do you plan on opening? And then I guess you’ll be closing at the same amount if we look ahead. Are you looking for 5% and then closing 5%? Or is it 3% and then closing 3%? Or…

It’s closer to 3% opened and closings.

All right. Thanks very much. Good luck.

Thanks.

Our next question comes on the line of Rick Nelson with Stephens. Please proceed with your question.

Good morning. Just to follow up on that capital allocation question with the tapered store growth, do you contemplate more aggressive stock buybacks?

We’ll definitely be a little bit more aggressive, especially with the stock at these levels. The market is volatile right now. We expect it to continue to be for the near future at least. And so that does tempered a little bit. And so we’ll take a measured approach, but we’ll still be fairly aggressive at these levels.

Okay, got you. And then Paul [ph] filled in the guidance the extra week, what do you think that will have in the fourth quarter? I think your prior guidance have talked about $0.09 to $0.11?

And that’s still a good estimate, Rick.

Okay. Thanks a lot and good luck.

Thanks, Rick.

Thanks, Rick.

[Operator Instructions] And our next question comes from the line of Aldon Taylor with Deep Roots Capital. Please proceed with your question.

Hello guys. Going back to the capital allocation and the share buybacks, by my calculation in the last two months of the year, you guys only bought back about 30,000 shares and you bought back like 200-some thousand and – but you guys are trading like two times EBITDA to earnings, probably say, EBITDA. I mean, it seems like to me the best use of our capital was buyback your shares. Could you guys talk about that some more?

Yes. So we’ll be aggressive at these levels, like I mentioned. The environment is highly volatile right now, so we do take that into consideration. But we do agree that, that is a very good use of capital at this point, and we’ll likely be more aggressive in the back half.

Do you guys see it like, hey, guys, you’ve got $50 million in cash? I mean, you’re just seeing – you’re using cash on hand, because you guys are very conservative, which I like. Do you guys see the cash balances coming down to use? Because even if you use $25 million of cash, you guys can buy back 10% of the company.

Yes. No, you’re exactly right. And so we will use that cash on the balance sheet we have today as well as future free cash, and that free cash flow that we will see in the near future will be targeted towards buybacks. So that’s our assumption and our direction as well.

Okay. Well, thank you guys. I appreciate it and good luck.

Thank you.

Thank you.

And there are no further questions at this time. Please continue with your closing remarks.

Thank you very much for being on the call today. I know things have been a little disappointing, but we feel like we’re in position that we finally have these tools to compete with others, and we look forward to having you on our next earnings call. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.