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Construction Delays Plaguing M.D.C.

The company guides its third quarter lower, although it expects full-year results to beat estimates.
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Construction delays will push back the completion of 450 home sales in Nevada and Arizona and cause



to miss third-quarter earnings estimates, the company said Wednesday.

M.D.C. said its third-quarter profit should exceed the $2.36 a share it earned in the year-ago quarter but may be below $2.65 a share, which is the lowest analyst estimate compiled by Thomson First Call. On average, analysts expect M.D.C. to earn $2.79 a share in the quarter, which ends Sept. 30.

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"In Arizona, labor and material shortages have extended significantly, without prior notice from suppliers, the lead times for ordering various home components, particularly cabinets, thereby delaying the completion of sold homes, M.D.C. said. As a result, about 250 Arizona closings will be pushed to the fourth quarter.

"In Nevada, the company recently has been notified by the local power company that their scheduling of needed electrical hookups for five of the company's new communities, in which approximately 170 sold homes have been completed, has been extended, thereby delaying the closing of these completed homes until October," it said. About 200 Nevada closings will be pushed back a quarter.

While guiding its third quarter lower, M.D.C. also noted it had "record" backlog at June 30 and said July and August orders were up 33% from the same time last year. Based on that, the company expects to exceed the Thomson First Call earnings consensus of $10.44 a share for full-year 2005.

"Management's expectations assume no unforeseen effects from the hurricanes in the Southeast, and no additional significant issues regarding the availability of labor, materials and power for active communities beyond those discussed," M.D.C. said.

The company expects record earnings and revenue in 2006.

M.D.C.'s stock was down $3.61, or 4.7%, to $75.58 on Instinet.