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GVSS - GVI Security Solutions Inc., Reports Record First Quarter 2007 Profits Exceeding Guidance Estimates
May 14, 2007 11:52:00 AM
Copyright Business Wire 2007
CARROLLTON, Texas--(BUSINESS WIRE)--

GVI Security Solutions, Inc. (OTCBB:GVSS), a leading provider of video security solutions featuring the complete Samsung Electronics line of products, today announced its record first quarter profit for the quarter ending March 31, 2007.

"We are pleased to report that the final profit numbers for the quarter came in above our previously announced estimates," stated GVI Chief Financial Officer Joe Restivo. "We had predicted operating income in the range of $400,000 to $500,000 and delivered operating income of $515,000. In addition, our reported net income of $160,000 came in above the $50,000 to $150,000 range we had publicly announced in late March."

"The results we are reporting for this quarter are a significant first step on a new path for GVI," stated GVI Chief Executive Officer Steven Walin. "The decision we made to emphasize GVI's core business has been an important driver in the success of our ongoing turnaround. We have demonstrated that we can deliver on our goals and we look forward to continuing to deliver superior results moving forward."

Net income for the first quarter of 2007 was $160,000, less than $0.01 per diluted share, compared to a net loss of $2.5 million, or ($2.48) per diluted share, in the first quarter of 2006. Excluding results from discontinued operations, the net loss a year ago was $1.5 million, or ($1.53) per diluted share. Operating income during the quarter was $515,000 compared to a loss of $1.1 million the prior year. Operating margin was 4.5%, compared to negative 9.6% in the first quarter a year ago.

Gross profit for the first quarter was $3.0 million, up from $2.4 million a year ago. Gross margin improved to 26.9% from 9.2% in the fourth quarter of 2006 and 20.2% a year ago. This improvement was directly attributable to the Company's movement toward higher-margin, core products and away from non-core product lines such as access control and other products, which generally carried lower margins.

Net revenues in the first quarter of 2007 were $11.0 million as compared to revenues of $11.7 million during the same period last year, and essentially unchanged from the fourth quarter of 2006. The decrease in sales year-over-year was caused primarily by a decline in sales from non-core business lines and sales channels, including direct to consumer and aftermarket channels.

Selling, general and administrative expenses declined to $2.4 million in the first quarter of 2007, or 22.2% of revenues, from $3.5 million, or 29.8% of revenues, during the same period in the prior year. The reduced expense was the result of cost reduction efforts across many of the Company's cost centers.

Conference Call

The company will host a conference call at 4:15 p.m. ET on Monday, May 14, 2007, to discuss earnings for the first quarter ended March 31, 2007. To participate in the event by telephone, please dial [phone] five to ten minutes prior to the start time (to allow time for registration). The conference call will be broadcast live over the Internet and can be accessed by all interested parties at http://65.197.1.5/att/confcast. Enter conference ID# 873650. To listen to the call, please visit this Web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live webcast, an audio replay of the conference call will be archived at http://65.197.1.5/att/confcast for 90 days. A digital replay of the call will also be available on Monday, May 14, at approximately 5:30 p.m. Eastern Time through Monday, May 21, at 11:59 p.m. Eastern Time. Dial [phone] and enter access code 873650.

GVI Security Solutions, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(In thousands, except per share amounts)

Three Months
Ended
March 31
-----------------
2007 2006
-------- --------

Revenues $11,021 $11,696

Cost of Revenues 8,059 9,339
-------- --------

Gross Profit 2,962 2,357

Selling, General and Administrative Expenses 2,447 3,481
-------- --------

Operating Income (loss) 515 (1,124)
-------- --------

Interest Expense 351 398

Income (loss) from continuing operations before
income taxes and loss from discontinued operations 164 (1,522)

Income Tax Expense 4 23
-------- --------
Income (loss) from continuing operations before loss
from discontinued operations 160 (1,547)

Loss from discontinued operations, net of taxes - (962)
-------- --------

Net Income (loss) $160 $(2,509)
======== ========

Basic income (loss) per common share:
Continuing operations income (loss) per common
share $0.00 $(1.53)
======== ========
Discontinued operations loss per common share $0.00 $(0.95)
======== ========
Net income (loss) per common share $0.01 $(2.48)
======== ========
Weighted average common shares outstanding 27,654 1,013
======== ========

Diluted net income (loss) per common share:
Continuing operations income (loss) per common
share $0.00 $(1.53)
======== ========
Discontinued operations loss per common share $0.00 $(0.95)
======== ========
Net income (loss) per common share $0.00 $(2.48)
======== ========
Weighted average common shares outstanding 33,455 1,013
======== ========
About GVI Security Solutions Inc.

GVI Security Solutions Inc. is a leading global provider of video surveillance security solutions to the homeland security, institutional and commercial market segments.

Forward-Looking Statements:

Some of the statements made by GVI Security Solutions, Inc. in this press release are forward-looking in nature. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may differ materially from those expressed or implied by the statements herein. GVI Security Solutions, Inc. believes that its primary risk factors include, but are not limited to: ability to continue as a going concern; uncertainty of profitability; reliance on primary supplier; credit limits imposed by primary supplier; effective integration of recently acquired operations and personnel; expansion risks; effective internal processes and systems; the ability to attract and retain high quality employees; changes in the overall economy; rapid change in technology; the number and size of competitors in its markets; outstanding indebtedness; control of the Company by principal stockholders; law and regulatory policy; the mix of products and services offered in the company's target markets; and other factors detailed in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2006 currently on file, as well as the risk that projected business opportunities will fail to materialize or will be delayed.

Source: GVI Security Solutions, Inc.



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GVI Security Solutions
Esra Kahraman-Pope
972-245-7353