- The Washington Times - Monday, October 15, 2001

Martin Roenigk can stand on the opposite side of a window his company sells and be clearly visible.

It is less apparent how strong the seemingly common building material is, but the glass in it will withstand the force of a bullet. The federal government long has seen the value of the bullet-resistant glass CompuDyne Corp. makes.

But now a once-little-known company in Hanover, Md., is fielding more calls than usual about its security products, from municipalities anxious to improve security around water plants to companies worried about the safety of their workers since the Sept. 11 terrorist attacks.

CompuDyne is in the midst of a project that began after two U.S. embassies in Africa were bombed in 1998. As part of a larger $3.5 billion initiative to rebuild embassies and strengthen existing buildings, CompuDyne is installing bullet-resistant glass and attack-resistant doors in 50 U.S. embassies across the world.

Multiple Federal Reserve buildings and security booths at the White House also are equipped with CompuDyne's reinforced glass and doors. So is the U.S. Holocaust Memorial Museum.

Interest in CompuDyne has increased its profile beyond Mr. Roenigk's expectations, and its stock has risen sharply since the terrorist attacks. It closed Sept. 10 at $8.25 a share on the Nasdaq Stock Market, and it closed Friday at $13.59 a share, up 64 percent.

"What people need to realize is that CompuDyne is a real company with real earnings. But prior to September 11, we had no exposure whatsoever," says Mr. Roenigk, the company's 59-year-old president and chief executive.

Higher revenue

CompuDyne's revenue from attack-resistant products could grow from an estimated $20 million this year to $35 million in two years, Mr. Roenigk said publicly last month, before the company filed a registration statement with the U.S. Securities and Exchange Commission and entered a quiet period.

A new federal contract could boost revenue further. The company expects to compete for a massive new federal contract. President Bush signed a $5 billion spending package Sept. 21 that includes $2.5 billion to install bullet-resistant windows at the U.S. Capitol, White House and U.S. Supreme Court.

CompuDyne, which has 750 employees, is the largest U.S. manufacturer of bullet- and attack-resistant doors and windows in a fractured market full of small companies, analysts say.

But with little attention paid to it, the company has installed doors and windows in U.S. embassies around the world. Its doors and windows also are in buildings inside and outside the United States belonging to the U.S. Agency for International Development, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco and Firearms and the Secret Service.

The State Department is among CompuDyne's largest customers.

CompuDyne hasn't penetrated the commercial market for attack-resistant doors and windows, but private-sector companies have not had much interest in the expensive security products until now.

More companies are expected to inquire about safety products, including bullet-resistant windows, because of last month's attacks, says Brian Ruttenbur, a security-industry analyst at Memphis, Tenn., investment banker Morgan Keegan Inc.

"Interest in security is going to spread beyond government to the commercial sector," Mr. Ruttenbur says. "Anybody with physical security or access-control products is going to experience an absolute boom the next few years."

Backlog of orders

CompuDyne doesn't market its windows as bulletproof or its doors as attack-proof because it can't predict the force of all bullets or bomb blasts. That's why the term "bulletproof" is a misnomer, Mr. Roenigk says.

CompuDyne's windows are up to 3 inches thick and have multiple panes of glass to make them stronger. Layers of plastic woven into each pane of glass prevent them from breaking apart.

"The plastic also acts like a catcher's mitt and absorbs the force," says Barry L. White, sales and marketing manager of CompuDyne's Norshield division, the Montgomery, Ala., manufacturer of the safety glass and doors.

The windows are set in metal frames, which measure up to 5 inches in thickness. The frames are intended to keep the panes from bursting out of the windows.

The wooden, aluminum and steel doors are built to withstand sustained assaults. Independent tests for the federal government by H.P. White Laboratory Inc., a Street, Md., ballistic-research facility, are done to rate the strength of the doors. Teams of men try to force the doors open, and the longer they stay intact, the higher rating they are given.

The bullet-resistant windows weigh up to 350 pounds each and cost up to $3,000 each. CompuDyne's doors cost up to $6,000 each. That puts the doors and windows out of range of budget-conscious private-sector companies, says Mr. Roenigk, and he is expecting only a modest boost in sales outside the government.

CompuDyne does have a $16 million backlog of orders for its doors and windows.

Not just windows

Even though CompuDyne has gotten a lot of attention lately for its windows and doors, it makes and markets an array of other products. It also sells security products and software for use in jails and prisons. Sales to corrections facilities account for the majority of CompuDyne's revenues.

Another CompuDyne division based in Gaithersburg provides security services for the U.S. military and intelligence agencies.

CompuDyne paid $26 million in cash and stock in July to buy Tiburon Inc., a Fremont, Calif., company marketing software to police and fire departments that helps run emergency-dispatch centers.

CompuDyne has become so diverse within the security products and services industry that this year's estimated $20 million in revenue from the sale of attack-resistant glass and doors is just 14.8 percent of the projected $135 million in revenue it will record this year.

CompuDyne also bears little resemblance to the company Mr. Roenigk acquired six years ago.

CompuDyne has been around since 1952. Mr. Roenigk took control of it in 1995 when he worked out a deal to merge CompuDyne with his own company, Micro-Assembly Systems Inc., a Willimantic, Conn., manufacturer of equipment to automate factory assembly. At the time of the merger, CompuDyne was struggling. It lost $663,000 in 1995.

After the merger, Mr. Roenigk began to reshape the new company. He sold off its unprofitable parts and got rid of the management team responsible for putting CompuDyne in a weak financial position. He sold off a home-improvement division the company acquired.

All the changes left CompuDyne with just a single division, called Quanta Systems, its Gaithersburg security subsidiary.

Mr. Roenigk decided to shift the company's focus to the security business and he and his colleagues spent the next six years rebuilding CompuDyne.

"We elected to focus on security because we had Quanta, because security is a huge industry and because it was growing," Mr. Roenigk says.

Mr. Ruttenbur says the physical-security industry is a $30 billion market. The market for security at embassies and federal agencies is an estimated $1.7 billion, says Jim Macdonald, security-industry analyst at First Analysis Securities in Chicago.

It wasn't until 1998 that CompuDyne acquired the division that makes what now are among its best-known products the heavy-duty doors and windows buying it for $22.5 million from Apogee Enterprises Inc. in Minneapolis. It took two years to convince Apogee to the sell the division to CompuDyne, Mr. Roenigk recalls.

"The story is that they've done a good job of diversifying and growing," Mr. Macdonald says.

More stock sells

That is the story Mr. Roenigk hopes to get out.

"We've had six strong years of growth," he says.

CompuDyne had sales of $10.3 million in 1995, and corporate revenue is expected to grow to $200 million next year.

But it wasn't until the terrorist attacks that Wall Street began to pay attention to security companies. That is when CompuDyne's share price got a significant boost.

"Wall Street hasn't cared about security stocks in I don't know how long," Mr. Ruttenbur says. "Now it's paying attention."

And trading volume has skyrocketed.

"We thought we were way undervalued," says Mr. Roenigk, who owns 1.9 million shares of the company, or 37.4 percent of the outstanding shares of common stock.

Last week, CompuDyne took advantage of its resurgent stock price.

CompuDyne said it will sell 1.08 million shares of new common stock at $12 per share to private buyers. The sale, led by 14 institutional investors, will net the company about $12 million, after fees and expenses.

More importantly, it will help boost its $74 million market capitalization and make it more attractive to large investors. The stock sale will boost the company's value by nearly $13 million.

"The good news is that they are getting the market cap to a level that makes it of interest to institutional investors, so they are moving in the right direction," Mr. Macdonald says.


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