Armor Express cashes in on military, anti-terrorism markets post-bankruptcy

In the 1990s, Second Chance Body Armor was the darling of the northern Michigan business scene, with legends of its founder actually shooting himself to prove the efficacy of its products.

In 2004, a recall put the company in a tailspin, its assets sold off.

But now, following a merger with another body armor defense contractor and $200 million in federal contracts, the Central Lake company has risen again under the name Armor Express.

The rise has been fast and furious since a 2015 acquisition by investment companies Generations Management of Traverse City and Spanos, Barber Jesse and Co. in the San Francisco Bay area. The value of that transaction was not revealed.

In 2018, Armor Express merged with the Eden, North Carolina-based KDH Defense Systems, which gave Armor Express a coveted entry into the military body armor business.

Armor Express and KDH operate separately under a holding company called Praesidium. Armor Express moved its headquarters from Central Lake to Arlington, Virginia in July. The headquarters supports both companies and focuses on several nearby military-focused entities, 90% of which are located in the Washington, D.C. area.

It also bolstered its management team by recently hiring a handful of key executives that work out of the company’s northern Virginia headquarters.

Among them is CEO Jim Henderson, who has decades of experience in a variety of manufacturing-related businesses, including serving as former CEO of body armor manufacturer Point Blank Enterprises. He came to Armor Express at the start of 2019.

Matt Davis – son of Second Chance’s founder Richard Davis – now serves as chairman of the board of Praesidium and as director of business development at Armor Express.

He started Armor Express with several colleagues in 2005 by acquiring Second Chance’s Central Lake manufacturing and testing facilities, which are the primary sites for the design and manufacture of law enforcement agencies’ body armor systems.

“After Second Chance’s assets were sold, I felt a void,” said Davis, who had worked at a variety of jobs at his father’s company. “The way my father approached the business was relationship-focused. I felt there was an opportunity to continue that and get back in the business.”

Davis got back into the business … and then some. Armor Express does not release revenue or profit figures, but Davis said company revenues have grown by about 400% since the KDH merger.

Armor Express and KDH are looking for continued growth in 2020 from anticipated new law enforcement and military contracts.

“The military is a little different business,” Davis said. “Orders from law enforcement agencies are usually for five to 15 vests, but military orders can be tens of thousands of vests.”

Law enforcement soft-armor vests are custom-made to fit the user, while military vests are built to a standard size.
Armor Express also has had success in winning contracts from the Federal Bureau of Prisons and various enforcement agencies under the umbrella of the Department of Homeland Security.

The global body armor market is expected by some analysts to more than double between 2017 and 2026, from about $1.7 billion to nearly $3.9 billion. Much of that will be due to increased military and anti-terrorism spending by the United States and other countries.

Davis and other management executives retain an undisclosed amount of equity in the company. Davis remains actively involved in the company’s operations.

Armor Express’ Central Lake operation includes a 14,000 square foot state-of-the-art ballistics research and development lab.

Amor Express could grow its Central Lake operation even more if it could find additional employees, Davis said. It has a crucial need for sales representatives, and skilled and unskilled production workers.

The company’s growth has been a boon to tiny Central Lake, which suffered through years of numerous layoffs and business setbacks at Second Chance.

“(Armor Express has) been a good thing for Central Lake’s employment and tax base,” said Central Lake Township Supervisor Stan Bean. “We’re a lot better off with them than we would be without them.”

Armor Express’ Central Lake operation includes a 14,000 square-foot, state-of-the art ballistics research and development lab, which the company built in 2009.

“We’ve invested heavily in it to replicate how military labs operate,” said Jonathan MacNeil, director of ballistics research and development at Armor Express.

Davis has come a long way since working in a variety of jobs at Second Chance, which his father, Richard Davis, started in 1970. The elder Davis was known for demonstrating the effectiveness of his vests by shooting himself in the chest with a handgun while wearing one.

It was something Matt Davis said his father did more than 200 times in sales presentations for law enforcement agencies.

“There was no product on the market like that at the time and police officers were skeptical that it would work,” Davis said. “There was no internet or YouTube, so the only way to demonstrate the product was through a live shoot.”

Matt Davis credits the Second Chance vests with saving the lives of more than 1,000 police officers who were shot in the line of duty.

“It was an amazing feat that my dad accomplished,” he said.

But the company’s fortunes quickly crumbled after Tony Zappetella, an Oceanside, California police officer was shot and killed during a traffic stop in 2003 while wearing a Second Chance vest.

Second Chance was using a material called Zylon in its vests, which turned out to be defective. Its vests were sold to various local, state, federal and tribal law enforcement agencies.

The company, which had $85 million in annual sales at the time, filed for bankruptcy in 2004.

Second Chance and then-owner Richard Davis were subsequently sued by the Justice Department for allegedly pocketing a $6 million payment from Zylon’s Japanese manufacturer that was intended to fix the material’s degradation problem.

Richard Davis settled the case for about $1.3 million in 2008. He is retired and living in Florida.

Matt Davis said the issue of Zylon degrading in heat and humidity was an industry-wide problem. Indeed, the Justice Department said in 2018 that it had recovered $132 million from 18 corporations and individuals involved in the sale of Zylon body armor.

But despite the bankruptcy and numerous lawsuits against Second Chance over the defective Zylon vests, Davis said the episode did not diminish the respect law enforcement agencies had for his family name when he started Armor Express.

“We had a great deal of success between 2005 and 2015,” he said.

But Armor Express was developing a need for additional capital to fund its growth, which was provided by Generations Management and Spanos, Barber Jesse and Co. Executives of the two firms could not be reached to comment.

MacNeil said the company and KDH are focused on staying on top of ever-evolving new technologies demanded by law enforcement and especially military customers.

“The military is constantly looking for lighter, more mobile body armor technology,” he said.

KDH recently won a multiyear contract to provide the Marines with body armor vests that are as much as 12% lighter than the lightest vests ever provided to that branch of the military.

While Davis has found success in his new venture, he said there is one accomplishment by his father he’ll never top: the number of times he’s been shot while wearing an armored vest.

Davis said he’s shot himself  “seven or eight times” while wearing a thick telephone book between the vest and his body. He said the sensation is like being struck by the end of pool cue.

“It still leaves a nice welt on your chest,” he said. “It’s very dangerous. It’s not something you want to do on purpose.”

 

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