Command Security Corporation
Command Security Corporation
Sales: $94.31 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: CMMD
NAIC: 561612 Security Guards and Patrol Services
Command Security Corporation provides a variety of security services in several states (New York, New Jersey, California, Illinois, Connecticut, Pennsylvania, and Florida). It also performs back-office operations for a number of other security companies across the United States. The company’s main markets are New York, Los Angeles, Miami, and Chicago. The Guard Services division accounted for about 32 percent of revenues in fiscal 2003; Aviation Services accounted for nearly all of the remainder (Support Services accounted for less than 1 percent). Command’s security guards are deployed at locations such as hospitals, offices, and industrial sites. The company has aggressively sought to make up for business lost due to federalization of pre-board screening through other airport security assignments.
Command Security Corporation’s origins can be traced to the early 1980s. It was incorporated under New York law on May 9, 1980. Equities reported it was started with only a $200 loan. Company Chairman William C. Vassell started the business while a student at Western Connecticut State College. Condominiums were his original market, followed later by banks and hospitals. Vassell became president, chairman, and CEO of Command Security after attaining a 100 percent equity interest in the company in 1983. He had previously owned half of the company.
Command acquired two Connecticut firms, Garvey Security and Shamrock Security, in 1987. Each had revenues of more than $1 million a year. In the late 1980s, the security industry was booming due to increased attention to loss prevention and more outsourcing of security functions. By the end of the decade, Command was billing about $15 million a year, and had expanded to south Florida.
Public in 1990
Command went public in 1990, when revenues were $14.8 million. A new, lucrative line of business was started when Command began providing computerized accounting services to other security companies.
Command’s proprietary Comguard computer system went online in June 1990. Comguard kept track of scheduling, qualifications, and other variables in real time, as well as kept track of billing and payroll. Command’s fee for these services was 4 to 6 percent of the client firm’s revenues, reported Equities. This business also kept Command apprised of potential acquisition candidates.
Revenues were about $38 million in 1991, when Command Security was the 21st largest security company in the United States, accounting to the Security Letter. In April 1992, Command merged its New York City security operations with that of its back-office client, Madison Detective Bureau Inc. The Madison name, which dated back to 1932, was retained. Madison had revenues of $8 million a year at the time. Command acquired Madison in November 1993 for $2.2 million in canceled and assumed debt. Action Protective Systems, a New York area firm, was acquired from its French parent ECCO Sécurité in September 1992.
In 1993, Command accelerated its acquisition drive, acquiring seven security companies in a year and a half. By the end of this drive, Command had added offices in New Jersey, California, Illinois, and Massachusetts to its three key hubs in New York, Connecticut, and southern Florida.
National Kinney Systems was acquired from ISS International Service System, Inc. in October 1993. It had revenues of more than $20 million a year, and was active in Los Angeles, Chicago, and especially New York, where it had been in business since the late 1960s.
Big Business in the Mid-1990s
The bombing of the World Trade Center in 1993 brought new attention to the importance of security for public facilities. In addition, a recession was prompting some corporations to outsource their security operations. Command was taking in over $65 million a year by 1994. It had eight branches and employed 3,000 security guards.
The security business, a $6.5 billion industry in the United States, had 6,500 small companies competing in the mid-1990s. However, four national security companies (Pinkerton’s, Inc. (later owned by Securitas AB), Burns International Security Services, Inc., The Wackenhut Corporation, and Wells Fargo Corporation) dominated the industry. Command was about the same size as three dozen other regional companies.
Command expanded its guard business by acquiring Miami’s General Security Corp. in October 1994. United Security Group Inc., a New York company with annual revenues of $25 million, was acquired on February 24, 1995, for $4 million in cash and $1 million in assumed debt. Command bought Chicago-based National Security Ltd. the next month. National Security had revenues of about $2.6 million a year.
After United Security was acquired, John B. Goldsborough, formerly its president and CEO, took the top spots at Command Security, succeeding William Vassell, who remained chairman. Goldsborough resigned as president and CEO of Command in May 1995.
In 1996, Command Security employed 3,800 guards, some of them hired out to other security companies. Supervisors, dispatchers, and managers added another 150 employees. In addition to guard services, Command was also offering detective and related consulting services. Uniquely, Command soon began applying its back-office expertise to manage the off-duty security work of police officers employed by the Stamford, Connecticut police department.
Revenue (apart from service company revenue) for fiscal 1996 was $55 million. After three years of net losses, the company showed net income of $511,000. (Back-office services for other security companies were not included in Command’s profit and loss statements. These amounted to roughly $20 million.) By this time, Command had relocated its headquarters from New York City to Lagrangeville, New York, saving the company $100,000 a year. Command also sold off a Boston office during the year.
Reliance Security Group PLC acquired a 37.3 percent shareholding in Command for about $6 million in the fall of 2000. Command had revenues of $71 million a year at the time. Reliance obtained its shareholding by buying out a group of Command’s dissident shareholders at a hefty premium. The dissidents had halted Command’s rapid progress with a 1997 lawsuit.
Vassell was already aiming to build Command Security into a $1 billion company. It recently added Miami International to its roster of airport clients including LAX and JFK. According to Equities, Vassell at the same time was focusing the company on higher margin areas of the security business, such as protecting ATM service personnel (on behalf of NCR and Diebold) and providing security for international airlines. The ATM business was begun in 1998; Command signed up 290 independent affiliates to create national coverage. Command remained involved in traditional services such as access control, patrolling, and crowd control; this division accounted for about 60 percent of revenues. Aviation Services was the next largest division, with around a 40 percent share of revenues. Command also handled a number of different types of detective work, ranging from due diligence to surveillance and arson investigations.
Changes After 9/11
Security screening at the nation’s airports was federalized following the September 11,2001 terrorist attacks on the United States. Thus, Command lost all of its pre-board screening contracts in November 2002. However, the company was able to replace some of this business with other services, such as verifying documents and screening baggage. It also added three new airports to its client list—San Jose, Baltimore-Washington, and Portland.
Command had built up a significant business there through its Aviation Safeguards Inc. subsidiary, which had 1,500 employees nationwide. Aviation Safeguards accounted for about 35 percent of Command’s $72 million in annual revenue before the federalization; half of Aviation Safeguards’ revenue was from airport screening.
Command did experience an increased demand for security guards from owners of commercial buildings in the immediate aftermath of 9/11. Command Chairman William Vassell reported that customers were taking security more seriously. Revenues for fiscal 2003 rose to $94.3 million from the previous year’s $84.2 million.
In October 2001, Aviation Safeguards took over screening at the Philadelphia airport from Argenbright Security Inc., which was facing federal charges over using unqualified personnel.
Command Performance is the kind of performance that comes from meticulous preparation. Command Performance is the kind of performance that results from flawless execution. Command Performance is the kind of performance that exceeds your expectations. Command Performance … it’s the performance you can expect when you partner with Command Security for your security needs.
The war in Iraq, the SARS epidemic, and several airline bankruptcies cut into Command’s business. (This trend had started even before 9/11, with Tower Air, Inc.’s bankruptcy in fiscal 2000. Two years earlier, GFM Bayview, a back-office client to whom Command had extended a significant amount of credit, had folded.) Command achieved a net income of $2.4 million on record revenues of $83.9 million in fiscal 2002.
Reliance divested its holding in Command in 2003. Being part-owned by a foreign (British) company had begun to interfere with Command’s U.S. government business; the screeners who had let the 9/11 hijackers through security checkpoints had been employed by three foreign-owned companies.
Some areas of airport security were not federalized, including cargo security. In addition, five airports retained private security in a pilot program. On the down side, a few of Command’s airline clients filed for bankruptcy in 2002 and 2003.
After 9/11, organizations were more willing to pay a premium for experienced, well-trained security personnel in addition to advanced access control technologies. Airports and nuclear facilities were obviously targets for terrorists; religious institutions, especially synagogues, also provided a demand for more comprehensive security.
Aviation Services; Guard Services; Support Services.
Securicor PLC; Securitas AB; The Wackenhut Corporation.
- Command Security is incorporated in New York.
- William Vassell acquires 100 percent control of company.
- Two Connecticut security firms are acquired.
- Command goes public, offers back-office services to other companies.
- National Kinney Systems and Madison Detective Bureau are acquired.
- General Security acquisition brings Command to Miami.
- Reliance Security acquires 37 percent shareholding.
- Pre-board screening at U.S. airports is federalized.
- Reliance divests its holding in Command.
Arroyo, Arnaldo, “Command Security Rides the New National Trend,” Equities, July/August 2002, pp. 16–19.
Brooks, George, “Crime Can Pay,” Equities, March/April 1998, pp. 17 +.
_____, “The Dream Continues,” Equities, May/June 2001, p. 22.
_____, “New Beginning for Command Security,” Equities, November/December 2000, pp. 56 +.
_____, “Progress Report on Command Security,” Equities, June 1997, pp. 24 +.
Brooks, George, and Robert J. Flaherty, “Command Security Makes Crime Pay,” Equities, December 1996, pp. 20 +.
“CEO Interview: Command Security Corp. (CMMD),” Wall Street Transcript, February 14, 1994.
Flaherty, Robert J., and Arnaldo Arroyo, “Command Security Corporation,” Equities: Special Situations, October 2000, pp. 2 +.
Foss, Brad, “Airline Security Experts: Security Often Dictated by Profit Motives,” Associated Press Newswires, September 12, 2001.
____, “Federal Takeover of Airport Screening Does Not Spell Disaster for Large Security Companies,” Associated Press Newswires, November 20, 2001.
Gelbart, Marcia, “Atlanta-Based Security Company Will No Longer Cover Philadelphia Airport,” Philadelphia Inquirer, October 5, 2001.
_____, “Federal Air Security Legislation Means Changes for Private Aviation Firms,” Philadelphia Inquirer, November 20, 2001.
Goo, Sara Kehaulani, “Airports Favor Private-Sector Screeners,” Washington Post, May 30, 2003, p. El.
Mastandrea, John, “Security Industry Booming As Crime-Awareness Grows,” E airfield County Business Journal, July 4, 1988, p. 11.
Nemes, Judith, “Owners Tighten Security with Technology; Install Turnstiles, TVs, Sensors,” Cram’s New York Business, January 14, 2002, p. 45.
Scaglione, Fred, “Follow Up: Command’s Opportunity in Turmoil,” Equities, January-June 2003, p. 38.
Stewart, James, “Reliance Takes £6.6M Write-Down,” Independent (London), June 27, 2003, p. 21.
Vassell, William C, Edward A. Ramsdell, and David O. Tharp, “Bringing Contract Services On-Line,” Security Management, December 1, 1993, p. 40.