The Company is a leading manufacturer of flexible metal hose, and is currently
engaged in a number of different markets, including construction, manufacturing,
transportation, petrochemical, pharmaceutical and other industries.
The Company’s business is managed as a single operating segment that
consists of the manufacture and sale of flexible metal hose and accessories.
The Company’s products are concentrated in residential and commercial
construction, and general industrial markets, with a comprehensive portfolio
of intellectual property and patents issued in various countries around the
world. The Company’s primary product, flexible gas piping, is used for
gas piping within residential and commercial buildings. Through its flexibility
and ease of use, the Company’s TracPipe® and TracPipe® CounterStrike®
flexible gas piping, along with its fittings distributed under the trademarks
AutoSnap® and AutoFlare®, allows users to substantially cut the time
required to install gas piping, as compared to traditional methods. The Company’s
products are manufactured at its Exton, Pennsylvania facilities in the United
States, and in Banbury, Oxfordshire in the United Kingdom. A majority of the
Company’s sales across all industries are generated through independent
outside sales organizations such as sales representatives, wholesalers and distributors,
or a combination of both. The Company has a broad distribution network in North
America and to a lesser extent in other global markets.
The Company’s business is managed as a single operating segment that
consists of the manufacture and sale of flexible metal hose and accessories.
The Company has had the most success within the residential construction industry
with its flexible gas piping products, TracPipe®, which was introduced in
1997, and its more robust counterpart TracPipe® CounterStrike®, which
came to market in 2004. Partnered with the development of our AutoFlare®
patented fittings and accessories, both have enjoyed wide acceptance due to
their reliability and durability. Within that industry, the flexible gas piping
products that we offer and similar products offered by our competitors have
sought to overcome the use of black iron pipe that has traditionally been used
by the construction industry in the United States and Canada for the piping
of fuel gases within a building. Prior to the introduction of the first CSST
system in 1989, nearly all construction in the United States and Canada used
traditional black iron pipe for gas piping. However, the advantages of CSST
in areas subject to high incidence and likelihood of seismic events had been
first demonstrated in Japan. In seismic testing, the CSST was shown to withstand
the stresses on a piping system created by the shifting and movement of an earthquake
better than rigid pipe. The advantages of CSST over the traditional black iron
pipe also include lower overall installation costs because it can be installed
in long uninterrupted lines within the building.
The flexibility of the tube allows it to be bent by hand without any tools
when a change in direction in the line is required. In contrast, black iron
pipe requires that each bend in the pipe have a separate fitting attached. This
requires the installer to thread the ends of the black iron pipe, apply an adhesive
to the threads, and then screw on the fitting, all of which is labor intensive
and costly, including testing and rework if the work is not done properly. As
a result of these advantages, the Company estimates that CSST now commands slightly
over one-half of the market for fuel gas piping in new and remodeled residential
construction in the United States, and the use of rigid iron pipe, and to a
lesser degree copper tubing, accounts for the remainder of the market. The Company
plans to continue its growth trend by demonstrating its advantages against other
technologies, in both the residential and commercial markets, in both the United
States and overseas in geographic areas that have access to natural gas distribution
systems.
In 2004, we introduced a new brand of flexible gas piping sold under the registered
trademark “CounterStrike®”. CounterStrike® is designed to
be more resistant to damage from transient electrical arcing. This feature is
particularly desirable in areas that are subject to high levels of lightning
strikes, such as the Southeast and Ohio Valley sections of the United States.
In a lightning strike, the electrical energy of the lightning can energize all
metal systems and components in a building. This electrical energy, in attempting
to reach ground, may arc between metal systems that have different electrical
resistance, and arcing can cause damage to the metal systems. In standard CSST
systems, an electrical bond between the CSST and the building’s grounding
electrode would address this issue, but lightning is an extremely powerful and
unpredictable force. CounterStrike® CSST is designed to be electrically
conductive and therefore disperse the energy of any electrical charge over the
entire surface of the CounterStrike® line. In 2007, we introduced a new
version of CounterStrike® CSST that was tested to be even more resistant
to damage from electrical arcing than the original version, and substantially
more effective than standard CSST products. As a result of its robust performance,
the new version of CounterStrike® has been widely accepted in the market,
and thus during 2011, the Company made the decision to sell exclusively CounterStrike®
within the United States. This move demonstrated the Company’s commitment
to innovation and safety, and further enhanced our leadership in the marketplace.
In 2008, the Company introduced its first double containment piping product
– DoubleTrac®. DoubleTrac double containment piping has earned stringent
industry certifications for its ability to safely contain and convey automotive
fuels. DoubleTrac received certification from Underwriters Laboratory, the testing
and approval agency, that our product is fully compliant with UL971A, which
is the product standard in the United States for metallic underground fuel piping,
as well as approvals from other relevant state agencies that have more stringent
testing procedures for the product. Similar to our flexible gas piping, DoubleTrac
provides advantages over older rigid pipe technologies. DoubleTrac is made and
can be installed in long continuous runs, eliminating the need for manually
assembling rigid pipe junctions at the end of a pipe or at a turn in direction.
In addition, DoubleTrac has superior performance in terms of its ability to
safely convey fuel from the storage tank to the dispenser to the extent that
DoubleTrac is essentially a zero permeation piping system, far exceeding the
most stringent government regulations. Originally designed for applications
involving automotive fueling stations running from the storage tank to the fuel
dispenser, the ability of DoubleTrac to handle a variety of installation challenges
has broadened its applications to include refueling at marinas, fuel lines for
back-up generators, and corrosive liquids at waste treatment plants. In short,
in applications where double containment piping is required to handle potentially
contaminating fluids or corrosive fluids, DoubleTrac is engineered to handle
those demanding applications.
DEF-Trac®, a complementary product which is very similar to DoubleTrac,
was brought to the marketplace in 2011. DEF-Trac® piping is specifically
engineered to handle the demanding requirements for diesel emissions fluid (DEF).
Recent federal regulations require all diesel engines to use DEF to reduce the
particulate contaminants from the diesel combustion process. However, DEF is
highly corrosive and cannot be pre-mixed with the diesel fuel. This requires
that new diesel trucks and automobiles must have separate tanks built into the
vehicle so that the diesel emissions fluid can be injected into the catalytic
converter after the point of combustion. Similarly, a large portion of fueling
stations carrying diesel fuel are now also selling DEF through a separate dispenser.
In addition to being highly corrosive, DEF also has a high freezing temperature,
requiring a heat trace in the piping in applications in northern areas of the
United States. DEF-Trac® flexible piping is uniquely suited to handle all
of these challenges, as the stainless steel inner core is corrosion resistant,
and DEF-Trac® also comes with options for heat trace that is extruded directly
into the wall of the product. In summary, DEF-Trac® provides a complete
solution to the demanding requirements of this unique application, as such,
DEF-Trac® has been met with enormous acceptance from the industry that was
searching for a solution to the new environmental requirement. The unique market
position of DEF-Trac® has leveraged the penetration of DoubleTrac into the
broader market for automotive fueling applications.
In September 2013, the Company announced that it would soon be releasing its
newly developed fitting, AutoSnap®, as part of its flexible gas piping product
line. After successfully completing all required testing by independent testing
agencies, as well as extensive field trials across the United States by trained
TracPipe® CounterStrike® installers, AutoSnap® was officially introduced
to the market in January 2014 to wide acceptance. With its patent-pending design,
the product simplifies the installation process, and addresses installer preferences
for both speed and ease of installation. With a planned slow release during
2014 in order to effectively manage inventory levels in conjunction with its
well established predecessor fitting AutoFlare®, the Company expects to
ramp up availability during the coming year.