CompuDyne not getting expected post-9/11 orders

Problems in economy hurt security-item sales

October 22, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

CompuDyne Corp. thought it was poised for explosive growth in the aftermath of the Sept. 11 terrorist attacks - and why not? Many of the Hanover-based company's products could prove useful in the fight for homeland security.

But CompuDyne, though it sells items such as attack-resistant doors and windows, and high-tech systems to detect when even the smallest entity is moving toward a restricted coastline, isn't seeing business stream in as quickly as company officials had expected.

Worse, the attacks further weakened a shaky economy, so even contracts for jobs not related to terrorism are taking longer to finalize as towns, counties and states try to deal with budget deficits.

"There was a lot of stuff in the pipeline that they just sat on instead of sending out requests for bids," said Martin A. Roenigk, CompuDyne chairman and chief executive. "Then we got awards in the second and third quarters - we've gotten a lot of awards - but many are dragging their feet in turning them into contracts."

Because of these and other hurdles, CompuDyne has lowered its earnings estimate for this year to 45 cents a share from its earlier estimate of 60 cents to 65 cents. Its stock price, which soared after the attacks from $8.25 a share to nearly $19, has since dropped below $7.

It gained 3 cents yesterday to close at $6.96.

Roenigk said the company, which had revenue last year of $127 million, is expecting a strong 2003 and has $200 million in backlogged orders.

"It's not shocking to me that a company like CompuDyne might be disappointed," said Bruce Aitken, president of Homeland Security Industries Association, a new lobbying group. "I think many companies had unrealistically high expectations to begin with. Ultimately, we expect more than $140 billion will be spent on homeland security, but only $20 billion has been authorized for the current fiscal year as a result of congressional fights."

CompuDyne's problems have been exacerbated by several recent projects that had cost overruns - the amounts weren't disclosed - and its purchase of a $3 million, 75,000-square-foot facility in Alabama late last year to accommodate the new attack-protection orders it expected.

"We had a plant we clearly didn't need," Roenigk said. "We are just beginning to need it now."

Analyst Brian Ruttenbur of Morgan Keegan & Co. in Memphis, Tenn., said it's hard to fault management for moving ahead with the Alabama plant. That's because federal officials visited CompuDyne after the attacks and told the company it needed to beef up capacity at the plants that make blast-proof and bulletproof doors and windows for embassies because many new orders would be placed shortly.

Ruttenbur said he thinks the company has a lot of potential but that it's too soon for him to recommend the stock.

"I want to see some orders come through," he said. "I think they are coming through soon, but I don't believe it until I see the orders."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.