Wireless communications, security provide complementary service

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Thursday, July 1, 2004

SADDLE BROOK, N.J. - Diversified Security Systems is looking to wireless communications company Airorlite to provide a complementary product offering to its systems integration business Henry Bros. Electronics.

Though Airorlite is small, bringing only an additional three people onboard, the company has a backlog of $2.3 million worth of product that is expected to be installed through the end of 2004.

Airorlite’s business is different, since it offers equipment used to enhance or extend radio frequency services. But bringing Airorlite into the fold bodes well in that its systems are an earlier version of a system that Diversified Security’s systems integration arm is provid-ing technical maintenance on for the Queens Midtown and Brooklyn Battery tunnels in New York.

“It’s very synergistic to the electrical security systems Henry Bros. Electronics is installing and maintaining,” said Jim Henry, chief executive officer of Diversified Security.

As a result of the deal, Airorlite’s former owner, Lee Masoian, will continue as president of the wireless division. He will focus on business development and engineering.

Diversified Security paid $300,000 in cash for the Airorlite business, plus 37,000 shares in stock, according to Doug Beck, chief financial officer of Diversified Security.

The acquisition marks one of several for Diversified Security, but is different in that it is not a systems integrator. In recent years, the company bought security installation businesses in California and Phoenix to boost its presence beyond the New York and New Jersey markets.

The company is already beginning to see the benefits of its cross-country expansion. Sales are starting to spread evenly across the various regions, said Henry, whereas in 2003, 60 percent of business was derived from the New York area.

The company has also recorded a backlog of $13.6 million in work, with several jobs focusing on the homeland security market, such as transportation and port security.

But despite the company’s strides, it experienced some growing pains. The company recently reduced its headcount by 14 percent, from 118 people to 101 to eliminate some redundant positions that came about from the acquisition of the companies in California and Phoenix.

The reduction in workforce was not unexpected, said Henry, but the slow sales start in 2003 was. He said spending was more fiction than fact, but the company is beginning to get back on track with sales and increasing profitability.