Hello All. I've joined you because I just bought HERC for the first time. Why? Because Steven Carl, Chairman and CEO, showed me on regionl TV how their unique chemical technology can safely remove 20-40 years of hardened build-up inside municipal water pipes... without having to dig up the streets. Not only that, for the same dollars it would take to dig up and replace one mile of pipe, HERC can chemically clean and rehabilitate ten miles of pipe. And they do it with environmentally safe chemicals (exclusive patents) and methods. They have approval of the National Sanitation Foundation (NSF), a private agency commissioned by the EPA to establish national drinking water standards. To my mind, this is more than an exciting concept. It's a reality that can offer cities huge savings in costs while reducing traffic disruption due to unnecessary street excavations.
This information is from an interview of Steven Carl on March 31st on The Stockmarket Observer (CIU-TV in the Chicago area). He showed us a section of street pipe which had been badly constricted by iron and manganese build-up from bacteria, the same way fatty deposits clost down a person's veins. In pipes it's called tuberculation; in a person, atherosclerosis. A 6-inch pipe can be reduced to only 1/2-inch diameter. Constriction in pipes reduces water pressure and therefore fire-fighting capacity, makes the water taste bad and turns it red.
In a release on April 2, H.E.R.C. said, "It is a problem that we believe is affecting in excess of 1.5 billion feet of municipal water pipe across the country... We are the only company offering a chemical based cleaning technology for narrow-width pipes which is cost-effective for budget-constrained municipalities."
Where it would take HERC less than one day to rehabilitate and restore a pipe to service, it would take 3-10 times longer to excavate and replace the same length of pipe. How can HERC do it so fast? They shut off and isolate a section of pipe, hook up a mobile recirculation unit to hydrants at each end and then test for leaks. If none, they introduce the chemicals, circulate the water by sending it first one way, and then reverse the flow, sending it the other way until the chemicals have softened the bacteria and the residue is suspended. They dispose of it into the on-site sanitation system but only if it's been determined to be safe for disposal that way. Otherwise it's safely removed. Then the pipes are flushed with fresh water and restored to service. It's called trenchless technology.
Their procedures impressed me because they seem responsible at each phase. First they ask the city to send them a one-meter sample of pipe from the line under consideration. They have the walls of the pipe stress-tested in a lab at Arizona State in Phoenix. The sample is also chemically tested to determine what the tuberculation consists of. This way they can know how to appropriately dispose of the waste and also which are the most effective chemicals to use on that particular tuberculation. Then they chemically clean the sample to get an idea of how long the cleaning process will take in the actual pipe line.. usually 4-5 hours.
Carl showed us a section of pipe after it had been cleaned. The inside of the pipe was restored to its original diameter and appeared smooth. The walls still had their original thickness and had no defects. (I've learned from my local water department that one way of routing out a pipe is to drag a metal object called a "pig" through it. It couldn't be as thorough as chemical cleaning, especially in joints and curves.)
On April 2nd, H.E.R.C. announced a water pipe cleaning contract with the city of Cheyenne, Wyoming.
Another factor that seems signficant to me is that HERC has only relatively recently redirected their chemical technology in water pipe cleaning, so this part of their effort is still gathering momentum. They started out in the 80's with an all-natural chemical product for consumer and hardware trade called "Eliminate". It's for removing corrosion, hardwater scale, etc. and is sold in Home Depot and other hardware dealerships.
Then in the early 90's, the concept of cleaning water pipes was born. They designed and produced the equipment; they obtained patents and NSF approval. (This all took time.) On January 14, 1997, H.E.R.C. announced that John P. Johnson, CPA, joined the company as Chief Financial Officer. He was formerly the CFO for the New York Stock Exchange. So it looks like they're taking steps to insure quality operations.
Another of their operations is to clean pipes on ships. They just announced on march 27th, "Green Marine, a New Orelans-based manufacturer's rep company for marine industry products, is endorsing HERC's products and services and has agreed to market them through its eight representatives along the Gulf Coast... to military, merchant, commercial and pleasure vessels.. in Alabama, Lousiana, Texas and Mississippi." In the first three months of 1997, HERC cleaned water lines on three U.S. Coast Guard cutters.
Steven Carl said their sales in '96 were $2.8 million. They expect later in 1997 that their sales will be over $10 million. So it seems to me there are a lot of good reasons for this company to be of great service to municipalities in the future and to us stockholders in the process. I hope I've given enough information to encourage some of you to check out H.E.R.C. Products Inc. for yourselves and let us know your impressions.
Contact:S. Steven Carl, Chairman and CEO
Gary S. Glatter, President and CEO
(602) 492-0336
or
Investor Relations Counsel:
The Equity Group Inc.
Chris Garland (212) 836-9610
cgarland@equityny.com
Linda Latman (212) 836-9609
Val H |
