Del Frisco's 3Q Loss Narrows, Results Miss Street

Wednesday, Oct 9, 2013  |  Updated 12:03 PM CDT
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Del Frisco's 3Q Loss Narrows, Results Miss Street

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Del Frisco's third-quarter loss narrowed from a year ago when its results were weighed down by a large fee.

But its performance fell short of Wall Street's view, and the restaurant operator cut its full-year earnings forecast.

The stock declined more than 4 percent in midday trading.

For the period ended Sept. 3, the company that owns Del Frisco's Double Eagle Steak House, Sullivan's Steakhouses and Del Frisco's Grille restaurants, lost $380,000, or 2 cents per share. That compares with a loss of $2.4 million, or 12 cents per share, a year earlier.

The prior-year period included an asset advisory agreement termination fee of $3 million. The latest quarter also included $3.7 million in public offering transaction bonuses, compared with $1.5 million in bonuses a year ago.

Removing unusual items, earnings were 10 cents per share.

Analysts, on average, expected earnings of 11 cents per share, according to a FactSet poll.

Revenue for the Southlake, Texas, company rose 13 percent to $54.2 million from $47.9 million, helped by more operating weeks in the quarter. Wall Street called for $54.8 million in revenue.

Revenue at restaurants open at least a year edged down 0.2 percent.

Revenue at Del Frisco's Double Eagle restaurants open at least a year climbed 4.4 percent mostly on improved traffic. At Sullivan's Steakhouse the figure fell 5.9 percent. This metric is a key indicator of a restaurant operator's health because it excludes results from locations recently opened or closed.

CEO Mark Mednansky said in a statement that that Sullivan's Steakhouses are vulnerable to the weakness hitting the casual dining sector. He said the company is looking at ways to rebuild momentum, including through recent radio and cable TV ads that promote its fixed-price menu. Sullivan's is also remodeling some older restaurants.

Its shares fell 91 cents, or 4.6 percent, to $18.69 in midday trading.

Del Frisco's now expects fiscal 2013 earnings in a range of 89 cents to 93 cents per share. Its prior outlook was for 92 cents to 96 cents per share. Analysts predict earnings of 94 cents per share.

The company also lowered its forecast for revenue at restaurants open at least a year. It now anticipates an increase of 1 percent to 1.5 percent, down from a previous guidance for a rise of 1.5 percent to 2.5 percent.

Del Frisco's Restaurant Group Inc. owned and ran 36 restaurants in 19 states and Washington D.C. at quarter's end.

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