Del Frisco's Restaurant Group Inc. is planning a secondary offering of 5 million shares of its common stock.
The Southlake, Texas, company, which owns and runs Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse and Del Frisco's Grille restaurants, said Tuesday that the shares are being offering by its biggest stockholder, an affiliate of Lone Star Funds.
Del Frisco's won't receive any proceeds from the stock sale.
The underwriters will have a 30-day option to buy up to an additional 750,000 shares.
Del Frisco's also reported Tuesday that its second-quarter net income climbed as revenue improved at its Double Eagle Steak House and Grille locations. Adjusted earnings and revenue topped Wall Street's expectations.
The company reported net income of $4.4 million, or 19 cents per share, for the period ended June 11. That compares with $3.6 million, or 20 cents per share, a year ago.
Excluding certain items, earnings were 20 cents per share.
Analysts, on average, predicted earnings of 19 cents per share, according to a FactSet poll.
Revenue increased 19 percent to $60.4 million from $50.7 million. Del Frisco's Eagle Steak House posted a 17. 4 percent rise in revenue, while revenue for Del Fresco's Grille more than doubled. Revenue for Sullivan's Steakhouse slipped 2.7 percent.
Wall Street was looking for $58.9 million in revenue.
Revenue at restaurants open at least a year rose 2.5 percent. Total entrees sold at stores open at least a year, considered a gauge of customer traffic, rose 3.2 percent.
CEO Mark Mednansky said in a statement that the Southlake, Texas, company is working on positioning Sullivan's as an affordable neighborhood steakhouse by introducing a fixed-price menu offering.
Del Frisco's Restaurant Group maintained its forecast for full-year earnings of between 92 cents and 96 cents per share. It still expects revenue at restaurants open at least a year to rise 1.5 percent to 2.5 percent.
Analysts expect fiscal 2013 earnings of 95 cents per share.
The company has 35 restaurants in 19 states and Washington, D.C. Its shares finished at $22.59 per share on Monday. But its shares declined $1.48, or 6.6 percent, to $21.11 in morning trading. They have traded in a 52-week range of $11.73 to $23.22.
It's not uncommon for a company's stock to fall when a secondary stock offering is made, as it increases the number of shares outstanding. This dilutes the value of existing shares held by stockholders.