GVI turnaround, now in acquisition mode

Second quarter numbers confirm turnaround for formerly troubled manufacturer
Monday, October 1, 2007

CARROLLTON, Texas--GVI Security, which lost $4.5 million in the second quarter of 2006 alone, reported in August a $160,000 net profit for the second quarter of 2007, a 92 percent increase over Q1 2007, which was the company's first profitable quarter in years. Much of the bottom-line improvement comes from the reduction of selling expenses. In the most recent quarter, selling, general and administrative expenses accounted for 23 percent of $12.27 million in revenues; in the second quarter of 2006, those same expenses accounted for 40 percent of $11.16 million in revenues.
Chief executive officer Steve Walin, brought in from GE Security along with chief financial officer Joe Restivo just over a year ago, said the turnaround can be attributed to the simple practice of focusing the company back on its core business: representing the Samsung brand of surveillance equipment in North and Latin America, and "shedding all the non-productive businesses." Initiatives that sold surveillance systems directly to the consumer through Sam's Clubs, created an integration arm and brokered integration deals, and attempted to develop new analytics technologies have been discontinued, Walin said. "They were areas of the business that in concept were not bad, but in execution just didn't happen."
Success has come for GVI particularly in the education vertical, Walin said, where his sales team is working with the end user community to bring business to integrators.
Further, he said, he has been able to recruit a number of new management team members, coming from GE Security and Pelco, particularly. Why would people want to move from an established company to one that had a track record of "losing about a million bucks a month?"
Walin said the profitable first quarter helped, but "these are folks who wanted the challenge of working in a smaller, more entrepreneurial company, and to have some skin in the game to earn some stock options and hopefully gain some wealth in terms of the stock being worthwhile. These are people who are generally up for a challenge--It was quite frankly a touch decision for me to leave GE and go to GVI."
So, what's next? "Now that we've demonstrated that we have a viable company that's profitable and able to execute," Walin said, "we're in a position to look for opportunities to grow the company in addition to organically ... That's something you'll be hearing a lot about in the next quarter or so." He said to look for an acquisition that will be complementary to GVI's continuing growth in the middle market, "something where we can leverage our great sales channel, with video surveillance as a core part of the business and technologies that really could complement our relationship with Samsung."