Fiscal 2012 was a banner year for MI-Connection
by Staff Writer
DAVIDSON – The fourth quarter of fiscal 2012 ended on a high note for MI-Connection.
The board of directors of the Davidson/Mooresville-owned cable and broadband company breathed a sigh of relief Thursday night as CEO David Auger presented the preliminary year-end financial results. The company’s fiscal year runs July 1-June 30.
Higher revenues, customer growth and lower than expected expenses and programming costs meant good things for the company’s bottom line.
Auger reported revenues grew significantly in the third and fourth quarter of the year – from $3.9 million in the third quarter to $4.27 million in the fourth. Compared to the same quarters in 2011, revenue was $341,000 higher in the fourth quarter of 2012.
“This is all a function of customer growth, as well as the rate adjustment we put in effect in April,” Auger said.
Auger said even better news is that expenses moved in the exact opposite way with significant decreases in operating expenses. Auger said most of those savings were due to the transition with Bristol Virginia Utilities.
Additionally, the cost of goods sold, which is made up of programming expenses, also declined this year.
“Every year in January we get a rate increase from programmers and it goes into effect in the third quarter,” Auger said. “That’s usually an 8 percent increase, but our trend, which is a trend that won’t repeat itself, is a trend I’ve never seen in a cable system.”
Auger explained that increase was offset when the company took over operations from BVU in December board member Alan Hall renegotiated contracts for the company and decreased its “internet backbone.”
Auger was also excited about the company’s EBIDA (Earnings Before Interest, Depreciation And Amortization) report.
“We had around $370,000 for the first and second quarter, and once the transition went into effect, we started seeing growth and it jumped up to $812,000 for the third quarter and more than $900,000 in the fourth quarter,” Auger said.
And had it not been for a $122,000 copyright fee, the company would have seen almost EBIDA of $1 million in the fourth quarter.
Auger also reported the company gained 495 new customers in 2012.
“That means we’re finally growing the business horizontally, and it has to grow horizontally,” he said.
The company’s Revenue Generating Units also increased, with a net gain of 1,671.
“This was the highest video, data and customer net gains of any year since MI-Connection started, so that’s very big,” Auger said. “It’s also the second highest voice and RGU net gain in any year since MI started.”
“Can you repeat it?” Davidson town manager Leamon Brice asked at the end of the presentation.
The answer was, not really.
“We picked a lot of low-hanging fruit this year, and there’s still a couple left, but it will not be as significant as this,” Auger said.
He said the programming costs will go up, because it does for every cable company.
“If we want to carry programming, that’s what it’s going to cost,” he said.
Board member Brett Ellis said he was encouraged by Thursday’s report.
“These are strong results and I want to see the trend growing in the right direction,” Ellis said.
Board chair John Venzon said the numbers were great, but also exciting was customer satisfaction and morale among customers and employees.
“It’s about as good as it gets,” Venzon said. “We’ve still got a lot of work to do, but when you’re going through this transition, it’s very, very positive.”
Other board business
The board voted unanimously to switch its monthly board meetings to quarterly meetings on the fourth Thursday of the month following financial reports – January, April, July and October. To handle the monthly issues, the board will meet in smaller advisory committees with no more than three voting members on each, which will then present their information during the quarterly board meetings.
By the numbers
MI-Connection earnings for 2012
Third quarter $812,000
Fourth quarter $900,000
• 495 new customers in 2012
• 1,671 new Revenue Generating Units