🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

Earnings call: ClearSign Technologies posts record revenue growth

EditorEmilio Ghigini
Published 21/11/2024, 08:58
CLIR
-

ClearSign Technologies (CLIR), a provider of advanced combustion technologies, has reported a significant increase in its financial performance for the quarter, with revenues soaring to approximately $1.9 million from $85,000 in the same period last year. This marks a substantial year-over-year growth, with year-to-date revenues hitting $3 million, a $1.9 million rise from 2023.

The company also experienced a boost in gross profit margins, which climbed from 22% to 33%. The ending cash balance stood at approximately $14.5 million, while net cash used in operations was around $1.4 million.

Key Takeaways

  • ClearSign Technologies' quarterly revenues reached approximately $1.9 million, a significant increase from $85,000 in the same quarter of the previous year.
  • Year-to-date revenues are at $3 million, up $1.9 million from 2023.
  • Gross profit margins improved by 11%, rising from 22% to 33%.
  • The company's ending cash balance was approximately $14.5 million.
  • Net cash used in operations amounted to around $1.4 million.

Company Outlook

  • ClearSign is adopting an asset-light model to grow its business.
  • The company aims to expand market reach and reduce internal resource needs by leveraging partner sales networks through strategic partnerships.

Bearish Highlights

  • ClearSign has decided to suspend operations in China and put its registered business into dormancy by year-end due to delayed commercial progress.

Bullish Highlights

  • ClearSign shipped 20 burners to a Los Angeles refinery and received a 26-burner order from a Fortune 500 petrochemical company.
  • A new hydrogen flexible fuel burner is under development.
  • The company has strengthened its partnership with ZECO, which includes co-branding and joint marketing plans.

Misses

  • The suspension of China operations represents a setback amid otherwise strong performance indicators.

Q&A Highlights

  • CEO Jim Deller highlighted the growing need for different flaring technology in regions like California.
  • Deller expressed that the recent developments represent a significant step forward for ClearSign.
  • The company is experiencing growth and is becoming incredibly busy, necessitating additional office resources to handle the increasing business demands.

ClearSign Technologies' progress this quarter demonstrates a robust growth trajectory, underscored by substantial revenue increases and improved profit margins. Despite the decision to suspend operations in China, the company is poised for expansion through strategic partnerships and product line developments.

The emphasis on an asset-light model and co-branding initiatives with partners like ZECO indicate a strategic shift towards maximizing market reach while minimizing internal resource expenditures. CEO Jim Deller's remarks reflect optimism about the company's direction and the need to scale up resources to meet the growing business volume.

Full transcript - ClearSign Combustion Corporation (CLIR) Q3 2024:

Conference Operator: Please note that this event is being recorded. I would now like to turn the conference over to Matthew Selinger of FIRM IR Group. Please go ahead.

Matthew Selinger, IR Group Representative, FIRM IR Group: Good afternoon and thank you, operator. Welcome everyone to the ClearSign Technologies Corporation Q3 2024 results conference call. During this conference call, the company will make forward looking statements. Any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about the company's projections, expectations, plans, beliefs and prospects.

These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. The risks and uncertainties associated with the forward looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign's products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and other risks that are described in ClearSign's filings with the SEC, including those risks discussed under the Risk Factors section of the annual report on Form 10 ks for the period ended December 31, 2023, and the quarterly reports on Form 10 Q for the quarters ended March 31, 2024, June 30, 2024 and September 30, 2024. So except as required by law, ClearSign assumes no responsibility to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so. On the call with me today are Jim Deller, ClearSign's Chief Executive Officer and Brent Hynes, ClearSign's Chief Financial Officer. So at this point in the call, I would like to turn the call over to Brent Hynes.

So Brent,

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: would you

Matthew Selinger, IR Group Representative, FIRM IR Group: please go ahead?

Brent Hynes, Chief Financial Officer, ClearSign Technologies Corporation: Thank you, Matthew, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results for the quarter period ended September 30, 2024 was included on our Form 10 Q filed with the SEC on November 14. And with that, I'd like to give an overview of the financials for the Q3 of 2024. For the Q3 of 2024, the company recognized approximately $1,900,000 in revenues compared to $85,000 for the same comparable period in 2023. The year over year increase in revenues was driven predominantly by the shipment of multiple process burners through a California refinery customer.

I would like to note that this quarter's revenue is the largest quarterly revenue figure ever reported by the company. Our year to date revenues for the 9 months ended September 30, 2024 was approximately 3,000,000 dollars which is a $1,900,000 increase over the prior comparable period in 2023. This is also the largest year to date revenue figure reported by the company since inception. Our year to date gross profit margin also increased year over year by 11% from 22% in 2023 to 33% in 2024, adding approximately $340,000 in profit compared to the prior period. This profit was offset by $394,000 as a result of a one time accrual estimate related to the decision to suspend our China operations.

Jim will give more color about our China decision and suspension in a few moments. Our year to date net loss for the 9 months ended September 30, 2024 decreased by 104,000 dollars which is an improvement of 2.5% over the comparable period in 2023. I need you to keep in mind this net loss improvement includes the $394,000 from our one time China approval estimate. Now I'd like to shift our focus from the income statement to the balance sheet, more specifically cash. Our ending cash balance for September 30, 2024 was approximately 14,500,000 dollars Our net cash used in operations for the quarter ended September 30, 2024 was approximately $1,400,000 compared to approximately $1,300,000 for the same period in 2023.

With that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and your interest in ClearSign. The call today, we've decided to change the format from previous calls. We've received positive responses from previous presentations narrated in a question and answer format, and we believe that this will provide a more engaging call. We've also invited questions to be sent in by e mail.

So we're trying something new and we'll be interested in any feedback. So Matthew Selinger will lead a question and answer session where we'll go through our different product lines and business updates. So the overall subjects and updates covered will be much like our previous calls. We will view our product lines starting with our process burners and then move on to boiler burners. Now for that, I want to give some attention to our flare product lines since there has been a recently announced order in addition activity there.

I'll wrap up by discussing the outlook for the rest of the year and into 2025. So with that, I'll step back and hand it over to Matt.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great, Jim. So Jim, Chris and I just reported a record revenue quarter. Can you give a little more color, kind of a high level color on that by chance?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes, certainly. This so for example, this was definitely a record quarter for us by a long margin. I think it's also significant to look back over the trailing 12 months because our business is lumpy. If you look back over the 12 months, it's also a record period for us and you'll see that our revenue flows are significantly increasing. What's also important and as Brent stated, there was 11% increase in our gross margins accompanying that revenue.

That is good. From my perspective, I believe there is room for improvement with further volume and efficiency gains. But overall, with the increase in revenue and margin, I truly believe the business is definitely going in the right direction.

Matthew Selinger, IR Group Representative, FIRM IR Group: And so that revenue, as Brent mentioned, was mainly attributed to in the first one order. Would you mind kind of diving in and giving us a little more detail of that order?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. And this speaks to the lumpiness of our revenue flows. We have some very large significant orders, but they the nature of that is they don't hit consistently every quarter. So this quarter was primarily driven by the 20 burner order that shipped out to Los Angeles. Those burners were shipped from ZECO out to Los Angeles refinery in California.

We were expecting them to be started up early next year. We have learned that that will be delayed. The clients clarify that it's not nothing to do with ClearSign, but the start of those burners will now be around the middle of 2025. But Matt, if I can just to comment on the order. These burners are going to 2 heaters.

These are 2 large heaters in a very prominent refinery in the LA refining hub. 1 heater is fitted with 8 burners and 1 is fitted with 12 burners. And the reason I'm bringing that up, but I know it's going to be the middle of next gs now, but when these are up and running, I really believe that these are going to be a significant reference for us. These are because they'd be the biggest heaters we have in operation at that time. And I believe that having that reference and this performance in that LA hub is going to be a significant catalyst for increasing the future sales.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. Well, let's continue with the process burner line. I would like to can you give us some more color kind of the pipeline and outlook? I think when we left off last call, there was another large order that actually fell into this quarter. But maybe start off from there, kind of talk about that other order.

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. And I think this is relevant because it also gives some insight into future revenue expectations as well. So at the time of the last call, we just announced a in fact the largest order we received to date. This is the 26 burners going into a Fortune 500 global petrochemical company down on the U. S.

Gulf Coast. That order received by the way from an engineering and heater manufacturer called Bewalco USA. And if you get a minute, I'd really encourage you to look that company up to understand the type of company we are dealing with. The order on the Gulf Coast has some special operating requirements, but we've got the technology to do that. And also the recent 100 percent hydrogen flexible fuel burner that we have started to sell in combination with the new CFD model that we've invested in have really been some big drivers between that led to us receiving that order.

That order is going well and thinking of revenue certainly from these shippers burners, it gives some idea what to expect. But beyond that, we also have 2 other orders in progress for Curt Energy. These of course, Kern is a repeat customer for us. Those orders are incidentally also using this flexible fuel new hydrogen burner and we're in further discussions with Kern about some other orders that we expect they're going to need next year.

Matthew Selinger, IR Group Representative, FIRM IR Group: And then so earlier this year too, Jim, there was the Bakkt designation. And maybe kind of address that again, what is Bakkt? And are you seeing that helping kind of drive business our direction?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: So I think, yes. So switching from looking at what's in house and the revenue flow to what's driving our sales. We're seeing a lot of interest in the process burner product line across the board. There are some drivers, Matt, as you mentioned, the fact review that was done by the Southwest Air Quality Management District and announced early in the year. While significant for those of you who don't know, plant is best available control technology.

It is a review of new technologies that's run-in California by this run by all the airports in California, but administered by the South Coast Air Quality Management District. They've reviewed 2 of our result is that the performance that was documented from those installations have reset their definition of best available control technology for single burner process heaters and for multiple burner process heaters. That is recognized throughout the industry. We believe that is a very good validated reference for us. Matter of fact, I can also in the same period what we're talking about sales and enhancements, we conducted a burner demonstration with ZECO.

Back in August that went very well. That allowed us to show our burners running in a multi burner heater giving lead engineers and consultants and representatives of many of the top refining and petrochemical companies the chance to look at not only at our standard burner technology, but we also again have to present new hydrogen burner technology to them.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. And that was done at the ZECO facilities, correct? Yes. Yes. So speaking of ZECO, how is that relationship going?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: It's really been going very well. Xego been a very solid partner for us back since 2019 when we formed the relationship. As we've increased our business, they obviously they build all of our process burners. They're aware of the burners we shipped, about the 20 burners that went to California shipped from ZECO. They're aware of the 26 burner order that we've recently received and others unaware of the quotes that are going out because we have to schedule resources with them.

They're also aware of the hydrogen burners that we've done. We've I really believe without visibility into our growing business, we've increased our status with ZECO. And last week, we're able to meet with them and discuss a joint branding of a ClearSign ZECO Processburner line. So the intention is that ZECO will actually start now to promote ClearSign's Processburner technology under their own name and to market it and to brand it and promote it with our own global sales team. So we met with them.

We set a date for us to present our technology to their North American sales team and also discuss things like branding, website promotion, etcetera. So this is a huge development for us, what I'm very excited about.

Matthew Selinger, IR Group Representative, FIRM IR Group: Rob, that is great news. And I think it's a development that many of us have been waiting for. So from here, let's shift, we could, Jim, to the horizontal process applications. As this also seems like an area of business that's gaining quite a bit of traction. Would you mind giving us a little color on what you're seeing in the horizontal process

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: applications? Yes, certainly. This is a fairly new product line for us. It's one that, I'll be honest, has spread further than we anticipated when we started it. So just right on the horizontally fired process heaters, these are small heaters often going into the midstream industry that's typically gas processing.

But also we're finding there are a very wide variety of different industries that are going into. We recently received an order or in fact, 2 orders, repeat orders from exotherm going into the power generation industry. As an example, those orders going into Oklahoma and Missouri, so expanding our national footprint. We've also recently sold a in fact our largest burners to date to another midstream heater manufacturer, Devco. And the first of these midstream heaters burners were sold to another company here in Tulsa called Tulsa Heated Midstream.

But why these are all important is not just those the order flow rate, although that in itself is important, but the repeats inquiries and the uptick of interest and just the flow of future opportunities from them is really exciting.

Matthew Selinger, IR Group Representative, FIRM IR Group: So that actually brings up another question, Jim, kind of regarding sales channels or channel partners. It seems to be a growing part of the ClearSign story. How do you see this continuing to roll out and kind of present business opportunities for ClearSign?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. And if you don't mind, let me take a step back. So when I joined the company in 2019, back at that point, we laid out a strategic plan to develop ClearSign as a business, right? Just for everyone on the path of that, one was focused on the technology, right? We had to take the technology at the time and develop that into commercial products that met the customers' needs and that would be delivered to them in a manner that the customers were needing.

So that led to the partnership with ZECO because to process burners, you have to be able to deliver burners with the credentials of a company like ZECO and access to a test furnace and for manufacturing facilities that they are willing to work with and have approved on the boiler burner side. But we partner with California Boiler. They are the customer facing service team that actually set up Rogue to carry our product line. But as another part of that plan, we're aware that the company is funded by investor money. We needed to keep the company asset light, Yet to really leverage the potential of ClearSign Technology, we had to have a means to expand our sales force and get national and ultimately international reach.

And the way we plan to do that was by working through partners. So partners, obviously, like ZECO and California Boy, they're working to leverage their sales team. And I'll refer back to the recent comments about ZECO and why I'm so excited there. In the midstream heaters, we're selling to heater manufacturers. Now those heater manufacturers are out chasing their own work, chasing their own clients with their own industry.

They are using ClearSign burners with our capabilities installed in their products to make them competitive. What it essentially means for us is that the sales teams and the marketing of these new partners that the midstream heater manufacturer in this case become an extension of the ClearSign sales team. The ultimate goal that leveraging these companies and expanding the sales reach allows us to punch above our way and have a much greater sales outreach than we could just operating as ClearSign alone. So we're very much developing this business and plan to develop this business through partnerships.

Matthew Selinger, IR Group Representative, FIRM IR Group: Jim, thank you for the color there. You did mention the boiler burners. So can we shift to the boiler burner product line now? There were some recent developments and announcements regarding some very kind of important third party testing. Would you mind just giving a little bit more explanation on that?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Certainly. So back I believe earlier this year, the results were published from a study conducted by the California GET program. So quick background, the California GET program is funded by the gas utility companies in California. It's administered by the South Coast Air Quality Management District. They had engaged a global consulting company called ICF to conduct 3rd party testing to quantify the performance of this new burner technology ClearSign technology compared to the other ultra low NOx burners available in the market.

That report was published. It's available through our website. We also put a press release output link. But to summarize the data, the 3rd party study found that a boiler fitted with ClearSign burner ran and consumed 4% less energy than the burner fitted with or a boiler fitted with the industry standard burner. So to put that in meaningful terms from midsized 500 horsepower boiler in California with California engine prices, that will provide a savings of about $80,000 per year to our customers.

Alberta sell at a premium, but that $80,000 will more than cover that premium in a single year. So that in itself provides a very powerful selling proposition for ClearSign. In addition to that, that fuel savings will equate to our 500 tons per year CO2 savings for the customer. And the study also found or what we knew was that the ClearSign burner is capable of operating down at sub-two 0.5 parts per 1000000 NOx levels. The standard industry Oxlox burner was only able to run down to 6 parts per 1000000.

Matthew Selinger, IR Group Representative, FIRM IR Group: So that's some compelling data. So with that, can you give us an update on kind of the project pipeline in boiler burners?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. We have a few orders in progress. There's some burners due to be shipped. There was a probably the first of a series of 4 boilers going out to a customer in California. That burner is built and close to being ready to ship.

We of course have a number of burners now up and operational. A couple of pieces of fairly big news that's new right now. We have a very large burner installed in San Joaquin Valley area. This has been installed and out there for a long time waiting for their construction. We have finally got to the point that that burner, I believe, is about done.

It's in. It's up and running. As of today, we have actually engaged a 3rd party source testing company. These are the companies that do the formal measurements. We've had them take preliminary measurements for us because down at the NOx levels are running at the or the analyzers are not all consistent.

So we wanted to get their full spec equipment. They've measured the performance and found that the NOx is under the guarantee level. The final formal source testing and report is being conducted. That's not completed yet. So we don't have the final results.

But obviously, at this point, we're optimistic that this is going to be a successful installation for us, accepted by the customer. And when it is, I cannot emphasize how important I believe this will be for an installation. The very large boilers operating and requiring less than 2.5000000 NOx was the target market that was the primary objective when we initially engaged with California Boiler and mutually decided to develop a product line and to market it and to put the effort that we have to get into the California market. So this, I believe, is going to be a very big benchmark for the ClearSign and our brand that has the road burner in California.

Matthew Selinger, IR Group Representative, FIRM IR Group: And when you say large, could you just quantify how large?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. I mean in numeric terms, it's 1200 horsepower, right? This in terms of just physically looking at the boiler, this boiler is going to be in the region about 40 feet long. It's probably as big as you could put on the back of a semi truck and transport across the country. So this is a very large boiler on classified.

It's getting close to as big as fire tube boilers get before they switch over to the larger water tube and power generation boilers. It's one of the biggest it's in not the biggest fire tube boiler, but it is right up there at the top end.

Matthew Selinger, IR Group Representative, FIRM IR Group: So a notable demonstration of

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: our technology? Oh, huge demonstration. This is how you this is almost the perfect big boiler opportunity that people will look to and say, yes, that is a bona fide proof of the ClearSign technology.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. So we also announced a sale of a boiler last week and didn't know for an asphalt company and didn't know if you wanted to just get a little color on that sale.

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. It's actually important not so much for the this is a standard burner for us. It's the burner that I bought was just under 500 horsepower. Of course, our 500 horsepower or the burner model is the one that we'll use. But it's important to talk about this, right?

So going back, I discussed strategy and the vision we laid out in 2019 and how that manifests in the boiler burner business, right? The process burners aren't necessarily bespoke. There's unique details for every heater and no 2 of those are exactly the same. That's just the way the industry is. The boiler industry is different.

These burners are standard burners and the goal is to have a standard range of burners, the standard pricing that can allow our sales channels, in this case, road conversion California boilers to go out on their own and sell this product without needing input from us. Of course, we help the sales and marketing, strategic sales, etcetera. But the goal is to let them go hands free and just sell as many of these things as they can. When they get an order then to turn around and just place the order with ClearSign and we have ready made drawings and prints. We place the orders with our fabricator and they fabricate the burners.

This order or the reason we're doing that is that gives us a highly scalable model with very little need of ClearSign resources And it empowers the sales team to go out and pursue business on their own without needing to get back for quotes or details or engineering input from ClearSign. This order is the first of that system, right? It had I don't believe any input from ClearSign in the sales stage. We just received a purchase order. The drawings were done.

We turned around and placed an order that fabricated to deliver this burner. So it is that vision that we laid out in 2019 actually coming through to fruition for the first time in this order.

Matthew Selinger, IR Group Representative, FIRM IR Group: Sure. Thanks for the detail. It sounds like things are kind of starting to along. To round out the Boilerburner line, just last month, there was a filing regarding the China operations. And Brent alluded to this in his financial overview.

I don't know if you could just kind of touch base on this.

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: I can. I've actually got some notes here. So I need because this is formal. Just to pass the details on to everyone. So as you said, we filed a Form 8 ks that was filed October 1 announcing that we're suspending our operations in China and putting our registered business there into a formal state of dormancy by the end of the year.

So what that means is we still have the business in China, but that business is basically parked and not operationally. You might think we're going into hibernation for a period until we choose to revive it. This decision was a result of an increasingly delayed progress to gain commercial traction in China. And as Brent said earlier, there will be some significant one time costs. Those are mainly related to employee termination payments.

But going forwards, our cost to maintain our business in that dormancy status will be minimal, but it also gives the ability to maintain that business registration in China. There are additional details, those are available. If you look at the Form 8 ks, there is more detail there for anyone wanting to see more.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. Thanks for the update there. And then just weeks ago, there was an announcement regarding a flare. So it is the product line that we haven't heard from heard about for some time. Again, can you give some color here and talk about what you're seeing regarding this product line?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. I'd be very pleased to. This is an exciting area for us. So we've as you may know, we do have some flares out sold, I believe it was 2020 or maybe slightly off, but out and installed in the LA area right through California border. Those are up and running.

And even prior to my joining ClearSign, there were some flare technology sales. The recent order was for customizing our flare, right, the burnout that goes into flare, this is for customizing our burner element to fit into an existing flare to bring it into compliance with the needs of actually a customer that has already experience of ClearSign flare technology. That work is going well and we expect it to roll on to an equipment supply order in the reasonably near future. I don't have an exact date for that yet. But when you bring this up, I actually want to talk about the flare industry and actually the reason that it's exciting today.

On a previous call, I mentioned that we went to visit government in the state of California and especially their environmental regulatory personnel as they have new emissions requirements there. We are seeing the need for different flaring technology in regions like California. In industries actually different from the standard in industries like the upstream oil industry, it's different industries from that as these new regulations are rolled out and as these new energy projects are seeking permits. What that means for us is that we have a unique combustion technology. We also have a very strong engineering capability within ClearSign and it puts us in a very strong position to actually be a solution provider for some of these new projects.

And this manifests in there may be flares, there may be quite small thermal opsizer projects, but it allows us to get into an expansion of not just selling strictly the burner equipment, but actually selling more of a system wide project. When we look at the long term, right, our plans, my plans for ClearSign, they go beyond just the burners and the technology we have today. And a big part of that is getting into a solution provider and a systems provider. And one of the reasons that we're particularly excited about this is it starts to dip our toe into the role of a solutions provider and putting together a bigger package that has the potential to greatly expand the sales and the revenue of ClearSign.

Matthew Selinger, IR Group Representative, FIRM IR Group: That's exciting. It sounds like the ClearSign brand is getting out there as well as a reputation as a solution provider. One thing you mentioned the State of California, but I think you had similar conversations, am I correct, Jim, in states like Colorado? Yes. Fantastic.

So, Jim, that covers my questions regarding the business. So, I don't know if at this point you'd like to take a moment for final summary and use some thoughts on the business going forward?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Thank you, Matt. And I guess to reflect that, that was a new way of presenting the update from the company. So we'll be very pleased to hear from anyone on if you liked it or if you didn't. But I would like to wrap up and share some thoughts and just to give a perspective on where we are. So firstly, I want to reflect back on the financial numbers in the 10 Q that was filed last week and that Brent summarized earlier this afternoon.

As I said, also to look back over the last 12 months, I want to emphasize that I think this is a very significant development for ClearSign. Yes, the revenue is lumpy and it will continue to be lumpy for some time, but it's also significantly more meaningful than at any time in ClearSign's history. During the call, I've referred back a few times to the strategic path we laid out in 2019 as a framework for how the ClearSign business is developing. I do that because I think the framework is meaningful. It helps to understand how the specific items and developments that we talk about that may appear normal at face value by the interwoven building block of a highly integrated asset light company and how we're growing that to have national reach and recognition and how we are growing and the importance of growing that with our partners.

So building a network of companies, especially comprising our sales network, I can't mention all of them, but the ones that we conclude by name, I'll just run through some key ones here. Of course, ZECO. ZECO are key for what we do. They've been a fantastic partner. And again, I want to emphasize the recent developments, the conversations we've had about jointly marketing a co branded ZECO ClearSign process burner.

We will keep you updated as that rolls out. It will be a process. I cannot emphasize how big of a step forward this is for ClearSign. But I didn't mention in the call, just putting ZECO in perspective, they have in the region of 2,500 employees, they've got 30 offices worldwide. They are a true global company and the ability to promote our technology and to actually have ZECO promote our technology as a Zeco burner with ClearSign technology is I think has massive potential for ClearSign.

Secondly, California Border and Road Combustion, they are the customer facing and sales partner we have. They are based in California. They have offices and affiliates in other regions of the country, especially strong in the West Coast. Working with them recently have this big success or we believe the big success we're waiting to formalize of that very large boiler start up, and the 2.5 PPM guarantee in California. We talked about the WALCO and the large 26 burn order going down to the Texas Gulf Coast.

Please look up the WALCO in their website. They are a prominent engineering company. They work with the who's who of the refining and the petrochemical companies throughout the world, but especially in the U. S. And then in the midstream heater original equipment manufacturers, I mentioned we're now seeing a repeat flow of inquiries from Taltzyna Midstream, DevCo and Exotherm who gave us the repeat orders just these last few months.

So stepping back, we aren't growing. I'm pleased to note we've grown our installation base in California with both existing and repeat customers and we've got larger installations coming, especially with the 20 burners going out to the California refinery. We're now making headway into Texas with larger engineering firms, and I mentioned Bahuilco and heater manufacturers and Fortune 500 customers. There's a lot of attention to our new flexible fuel hydrogen burner and we have several projects in the execution phase utilizing this new technology. We have a pipeline of projects to be shipped, installed and in the engineering phases, the largest we've ever had.

And we have recently had notable developments in our boiler burner product line, just the burner in California in the progress of our sub-two point 5 ppm large boiler burner range and also the California GET report giving us third party validation of a compelling financial case for the purchase of our boiler burners. And again, that report is available through our website. It's also available through links from the press release we put out. When reflecting on what we've achieved, I want us all to acknowledge that this takes more than just people showing up for work. Our finance team, our technical and order execution teams to Ashley who's constantly creating and improving our marketing and sales materials, which by the way includes our website and LinkedIn posts.

I want to extend my sincere gratitude for the buying and dedication of all our ClearSign employees. And at the same thought, I want to thank ZECO from the leadership to the staff we interact with on a daily basis and California Boiler, especially for their commitment to taking care of our mutual customers and getting the job done. So with that, I'd like to open up the call for questions. Please, operator?

Conference Operator: We will now begin the question and answer session.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. And Constantine, this is Matthew Selinger. We also received quite a number of questions via email ahead of time. So I'm going to go ahead and start by reading off some questions here.

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Please go ahead.

Matthew Selinger, IR Group Representative, FIRM IR Group: Jim, directionally, where do you see margins heading?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: As mentioned in the call, we saw a very significant improvement in the numbers that Brent reported. I do believe that there is quite room for efficiency gains, certainly with the by the volume we're inspecting in the future as well. So there was an increase. There may be a room for that increase again just looking at the mix of projects we're targeting in the future. But we do expect I think the key thing to emphasize is that we do expect the margins to improve even further than the improvement that Brent reported in the financials here today.

Matthew Selinger, IR Group Representative, FIRM IR Group: Fantastic. I've got another one for you here, Jim. During the most recent conference calls, we've not heard much about Myriad and the ClearSign Eye Sensor technology. Visiting their website, it seems like a lot's going on. Would you able to give some insight on to the relationship and what's going on there?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes, certainly. Thank you. Whoever asked that question, thank you. That's now it's part of our business. We've been very focused on the burner business in the course.

So for those of you who don't know, Narayan is a company. It's affiliated with ClearSign, but it is an independent company that was set up in Seattle by an engineer that used to work for Boeing (NYSE:BA). ClearSign has not only burner technology, we have a sensing technology. And Nara was set up to with agreement with us to develop applications using the ClearSign sensing technology and especially in fields that are not core to the expertise we have at ClearSign, but to look at things like, obviously, with the engineer coming from Boeing in aerospace, transport and a lot of other applications. I'll expand this a little.

So we've we do have the standard burner sensors, it's actually a burner product line. Narion is helping us also finalize that technology. We believe that we're going to have industrial installations on a demonstration basis of the pilot sensors in the, let's say, reasonably near future. With Narion, they've also adapted and engaged industrial partners for a layered pilot sensing technology or a development of our sensor into flare applications, we also expect through that work that we'll be able to get some field at least demonstration units and hopefully commercial traction in the reasonably near future. Beginning into the core business of Nara, they've got a number if you look at the website, they have a number of really interesting projects.

I think the most prominent one at this point is one feature of the ClearSign sensor is an extremely fast sensor. And they have engagements to adapt that for what I described. The SIMPLY is a performance monitoring for a new and growing form of jet engines. There's a lot of interest there. That is a longer range prospect.

I believe the opportunity and the potential market is huge. But in terms of timeframe, we'd appreciate that projects like that and getting into technology like that do take longer to come to fruition. So that's going to be further out than about the 12 to 24 months that we're looking at for something to show from the Burnham and Flare Flame Sensors. But there's a I'd encourage you to look at that Naurion website and just see what they're doing. We set the contract up for the work with Naurion just to leverage our sensing technology, realizing there are some very big opportunities.

Naurion is self funding. So it's a win win for them and a win win for us.

Matthew Selinger, IR Group Representative, FIRM IR Group: Okay. So another question, Jim. I've noticed some new hires posted on LinkedIn. Could you give some color on these hires? Secondly, do you foresee additional or any positions you're actively looking to fill?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. We've we have we hired recently hired 2 new engineers. 1, Dominic is reporting to our Chief Technology Officer and the second Samuel is reporting to the group headed up by Jeff Lewellen, who oversees our burner business. So on the bottom line, the reason we brought these people in is our business is growing. We are getting incredibly busy and we need some more resources in the office to handle our growing business.

And what's really important and the reason we did this now is that both Matt Martin and Jeff Lewellen very well known and respected engineers in our field are incredibly effective as customer facing and business development people. And quite frankly as a business we need to get them out in front of the customers. And as we get busy and they get consumed with more production and product development work personally, it slows them down from doing that. So we've well, when we hired 2 great engineers, they will give us some bench depth, they will handle the ongoing work and really free Jeff and Matt up to focus on technology development and be now in their customer facing role of developing our business. So you asked about looking forwards.

Right now, we do not have any open positions. But that said, as our business grows, it is I do expect that we will have open positions coming up to execute the orders we work and to keep our business growing. But also those positions will be part of the order execution. So if you're looking at the overhead of the company, I do not expect that to actually increase the overhead as that will be part of the cost absorbed by the projects and that will be bought into handle our work and as our work grows.

Matthew Selinger, IR Group Representative, FIRM IR Group: Jim, here's one from the analysts that cover us. They unfortunately were unable to attend the call. But Jim, how would you describe your current pipeline compared to a year ago?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: That's I mean, it's grown substantially. The orders we're getting and the people we're talking to are much more mature. The orders are big. And we've seen that the 26 orders going burns going down into Texas, working with companies like the Wellco. If you just look at I know you can't see, but the frequency of the inquiries we're getting in, we're now getting in multiple inquiries a week rather than an inquiry every few weeks and just handling that and looking at that's one of the key metrics that I look at internally.

It's just looking at the number of quotes we're putting out and the frequency and that is just constantly picking up at a very pleasing rate. So it's looking very promising.

Matthew Selinger, IR Group Representative, FIRM IR Group: Great. So there's been a few questions very similar to this one and I'll kind of summarize it here. With the new administration coming to place next year, will focus on reducing NOx emissions remain important? I know you can't see the future. And could there's a second and B and could more focus on production in the United States be beneficial for ClearSign?

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Yes. I truly wish I had that calibrated crystal ball. Look, I've been in this industry now for about 30 years. So I've seen multiple administrations come and go. And typically the start of ABAP administration, there's great expectations one way or the other.

And the reality is that the influence they have is significantly less than what we expect at the start of the administration. I mean, just the timescale of the projects and what we work with is measured in years, so the administration will come and go before they've had a significant effect. Regarding the NOx emissions, they are primarily controlled by the local states. They are based on the need to adjust ground level ozone down to standard levels that were set out many years ago. So we do not expect any significant change there.

I mean from what we're hearing, there's focus on decarbonization that is a periphery to us. We are mainly focused on MOX emissions and operating efficiency. But also bear in mind that our most of our customers are global companies, a lot are based in Europe. They all post their own environmental mandates and their objectives there on their websites and they are driving towards that. So I think they are self motivated to achieve their environmental goals.

So again, changes in the administration don't dictate the companies, the goals they set themselves, especially not when those companies have a international holding. One on the I think on the other side, just looking forward to talking to our clients, one area of encouragement maybe I don't think related to the political climate, we are seeing an increased interest in LNG that's liquefied natural gas export and production. And we believe that there is a likely an uptick in that business next year, which will for us that's very relevant to the horizontal process burden business and those other clients I referenced earlier on today.

Matthew Selinger, IR Group Representative, FIRM IR Group: Here's another question that came in, Jim, and I think you've addressed this actually a couple of times in your comments, but somebody is asking, could you please provide some color on the essence of the relationship with ZECO? So maybe just kind of surmise what you said earlier? Yes. Guys, this is

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: probably the biggest step forward for ClearSign for a long time. This is a so ZICO have the relationship happened with them has basically taken the next step forward. In the recent developments, we are taking steps now to jointly market ClearSign products that gives the ZECO's sales team a product to promote that has the capabilities of ClearSign technology, has a dual branded process burner. And the ZECO sales team is worldwide, they're obviously truly a leading global company and having them promote ClearSign is a huge step forward for us. It's what we envisioned back in 2019 and to get to this point and having this development in our collaboration is certainly a very big deal for ClearSign.

And obviously from ZICO side, they have seen what we're doing and are doing this because they believe it's a very big deal and a big opportunity for ZICO also. Great.

Conference Operator: We don't have any questions over the phones at this moment. This concludes our question and answer session. I would like to turn the conference back over to Jim Deller for any closing remarks. Sir, please go ahead.

Jim Deller, Chief Executive Officer, ClearSign Technologies Corporation: Well, thank you. I'd like to thank everyone for your interest and taking the time to participate today. We look forward to updating you regarding our developments and speaking with you on our next call. In the meantime, please keep checking in for developments on our website, that's www.clearsign.com. And for more behind the scenes updates, I really encourage you please to follow us on LinkedIn.

And with that, I'll say thank you very much, and we will talk to you next quarter.

Conference Operator: This concludes today's conference. Thank you for attending today's presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.