Hanover Firm Capitalizing On Growing Safety Concerns

By Laura Willoughby



When public safety firm Compudyne landed one of the largest metropolitan cities in the Midwest - a $7 million contract supplying 911 computer software systems to Detroit - in June, it was just the latest in a series of ever-growing contracts supplying safety and security to top cities and government agencies across the country. That it's the third major city to sign on with Compudyne in the last six months, behind Kansas City and Milwaukee, shows signs of recovery from a rather disappointing 2002 and points to strong growth in 2003.

And for the entire BWI Corridor, it's just the latest notch of accomplishment in high tech companies posting strong results in a post-Sept. 11 economy. Many of the very technology companies that have made the BWI region home in the past few years have largely passed beneath the radar screens of even the staunchest economic supporters; increasingly new, strong tech companies have moved into the area, often to nondescript office buildings tucked away from main roads. Many of the firms work in top secret capacities to the NSA or State Department and keep what they do largely under wraps.

And while that's true for many of Compudyne's contracts and clients - one of its largest key segments targets the NSA, CIA and FBI, and exactly what the company does where and when is top secret - plenty of the company's most recent contracts point to an ever-expanding base of key cities and states, clients that could well fuel extraordinary growth this year and beyond.

Compudyne, a leading public safety company that employs 1,000 throughout the nation to support its $155 million revenue business, uses its Hanover headquarters to manage its strategic operations across four divisions. Just 80 employees manage operations from headquarters and another 200 support the company's divisions from Columbia offices.

For years the Hanover firm has added and built onto its public safety and security offerings, acquiring strategically-placed companies throughout the nation to grow its bottom line. From building bullet-proof and bomb-resistant embassies overseas to installing and maintaining prison security systems at some of the largest jails across the country, Compudyne's security systems are more important than ever in a security-minded world.

The company has four main divisions: Institutional Security Systems, which provides bullet- and bomb-resistant windows and doors, vehicle-debilitating barriers activated when drivers run a gate or barrier and a fiber optic perimeter sensor that can immediately and quietly notify security personnel when a barrier is breached; Automated Information Systems, software which drives 911 systems by tracking incoming calls, dispatched units and general information; Institutional Systems, used mostly in U.S. jails, which monitors all systems in a prison and builds and installs pre-fabricated jail cells; and Federal Security Systems, which protects the military and intelligence community with classified, James Bond-like solutions, including thermal imaging, retinal and palm scans.

But it's the 911 systems and the Automated Information Systems group, solutions acquired mainly through a takeover of Tiburon in mid-2002, which has driven Compudyne's growth to date this year. "[That acquisition] moved us into a fast-growing business with very steady growth opportunities," said Geoff Feidelberg, Compudyne CFO. In fact, for all of May, the company logged a total of $12.6 million in new contracts, $10 million of that for the 911 systems. Even the company's largest contract to date - an $8.6 million contract in Kansas City - came from the Tiburon division.

Acquiring Tiburon was just the latest in a string of takeovers and acquisitions that have put Compudyne back on top of its industry after a near-fatal bout with bankruptcy in 1995. Solid leadership and an aggressive growth and acquisition strategy, not to mention a nation that's increasingly focused on public safety and attack protection, have helped lead the company onto solid footing again.

Even an unexpected backlog in homeland defense funding didn't stall the company for too long: Although 2002 revenues ended up below the company's projections, the overall corporation posted a net revenue and stock dividend increase for the year.

When Sept. 11 brought increased attention to public safety, Compudyne stood to add more customers and contracts. Investors concurred, and the company saw its stock price rise. But despite the homilies and promises for homeland defense funding, the actual money has yet to materialize, leaving Compudyne hopeful but not depending on the federal government for its next big round of contracts.

Instead, the company is steadily expanding its emergency response 911 software system and turning its attention to private companies.

"The software to assist with first responders is a large growth engine for us," Feidelberg said. "People are more and more sensitive to 911 and its ability to respond."

"All of our segments - federal, state and local governments and the commercial segment - have huge potential, but if the commercial segment would invest in their security, that would be huge growth."