ClearSign Technologies (CLIR) - 2025 Q2 - Quarterly Results

Introduction This section introduces the key participants of the conference call and outlines the standard forward-looking statements disclaimer Call Participants & Disclaimer The conference call commenced with an introduction of key participants and a standard forward-looking statements disclaimer, emphasizing the inherent risks and uncertainties associated with future projections - The call included Matthew Selinger (Investor Relations), Brent Hinds (CFO), and Jim Deller (CEO)[1][4] - Forward-looking statements are based on current judgments and subject to numerous risks and uncertainties, including successful field testing, market expansion, and other risks detailed in SEC filings[2][3] Q2 2025 Financial Performance This section details ClearSign's Q2 2025 financial results, highlighting revenue growth, reduced net loss, and a strong cash position with improved operational cash flow Key Financial Highlights ClearSign Technologies Corporation reported a significant year-over-year increase in Q2 2025 revenues, primarily driven by spare parts and a boiler burner sale. The net loss decreased due to a substantial reduction in research and development expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Revenues | $133,000 | $45,000 | +195.56% | | Net Loss | (Decreased by ~$200,000) | | | | R&D Expenses | (Reduced by $155,000) | | | - The year-over-year increase in revenues was largely driven by spare parts orders and a boiler burner sale to existing customers[7] - The decrease in net loss was predominantly due to a $155,000 reduction in research and development expenses, resulting from reduced product development work[8] Cash Position & Capital Management The company achieved a favorable year-over-year reduction in net cash used in operations, primarily attributed to customer cash collections. ClearSign maintains a strong working capital position, which is believed to support business scaling and foster confidence among customers and suppliers | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Cash Used in Operations | ~$511,000 | ~$1.5 million | ~$1 million favorable reduction | | Cash & Cash Equivalents (as of June 30, 2025) | ~$12.3 million | | | | Common Stock Outstanding | ~52.4 million shares | | | - The million-dollar favorable year-over-year reduction in net cash used in operations was predominantly driven by customer cash collections during the quarter[9] - A Form S-1 registration statement was filed to re-register outstanding redeemable warrants from an April 2024 public offering, with no new securities being offered or sold[10] - The company believes its current working capital position is well-suited to scale the business and provides confidence to customers and suppliers for long-term engagement[11] Business Updates & Strategic Initiatives This section provides updates on board changes, progress on major projects, new product developments, strategic partnerships, and the expanding sales pipeline Board of Directors Transition ClearSign completed a Board reconstitution, reducing its size to five members with one open position, following the resignations of prior directors. The new Board is described as energized and focused on the company's future growth - The Board size was reduced to five members, with one position open, following the resignation of prior directors[12] - The Board has been reconstituted with new members who are energized to help ClearSign grow in the future[13] Major Project Updates Despite market uncertainty and delayed timelines, ClearSign has made significant progress on two large process burner orders for major refiners and chemical companies. The California 20-burner project is nearing startup, and the Gulf Coast 26-burner project has completed testing and is moving to manufacturing - Significant uncertainty in the market has led to delayed timelines for orders, but no orders have been lost[14] - The 20-burner order in California for a major refiner is about to start up in the next couple of weeks, expected to be a very significant reference[14] - The 26-burner order for a Gulf Coast chemical company has completed technology-stretching burner testing, meeting all requirements, and is awaiting authorization to move into the manufacturing phase for shipment this year[15] - The Texas Commission on Environmental Quality extended the timeline for the Gulf Coast project, with startup now expected in early 2026[16] Advanced Engineering Order ClearSign received an advanced engineering order from an existing customer to enhance their furnace productivity by optimizing existing ClearSign burner technology through computer modeling. This project is customer-driven and allows for new technology development - An advanced engineering order was received from a frequent existing client to help increase the throughput of one of their heaters[17][19] - The order involves using computer modeling to enhance ClearSign's own burner technology to enable the customer's furnace to operate more effectively, driven by customer demand[18] - This is an actual order, not an R&D project, and provides an opportunity to develop new technology or enhancements to existing technology[18][19] DoE Hydrogen Burner Development The Department of Energy hydrogen burner development project is in its final stages, with new large and small burner designs currently in manufacture. These burners are scheduled for installation and demonstration at the Zeeco test facility in the coming months and have garnered significant industry interest - The DoE hydrogen burner project is in its final stages, progressing very well with an extension[20] - New large and small burner designs are currently in manufacture and scheduled for installation and demonstration at the Zeeco test facility in the coming months[20] - These burners offer the ability to operate through the range of refinery customer fuel gases and have received significant interest from household name end-users, with discussions for witness testing[21] Strategic Partnership with Zeeco ClearSign continues daily collaboration with Zeeco on marketing, sales, engineering, and testing for their co-branded burners. While no orders have materialized yet, Zeeco's sales team is actively promoting ClearSign opportunities to their customers - ClearSign works with Zeeco almost daily across their marketing, sales, engineering, and testing teams[24] - Zeeco's sales team is actively promoting ClearSign opportunities with their customers, though orders typically take time to ramp up[24] M-Series Product Line Expansion The M-Series product line continues to see strong interest in the midstream sector, with successful M1 installations. ClearSign is developing a new M25 burner, a 'detuned' version of the M1, to target a larger volume market segment requiring good low NOx but not ultra-low NOx, aiming to expand market reach - Strong interest continues from the midstream sector for the M-Series, with the first M1 installation operating flawlessly and another due to start up later this year[25] - ClearSign is developing an 'M25 burner' from the M1, targeting a slightly higher NOx level market within midstream, which is perceived as a much bigger volume part of the market[26][28][30] - The M25 aims to provide a reduced price and scope burner to meet a broader market need for good low NOx, rather than exclusively the ultra-low NOx niche[26][28][30] Flares and Systems Projects Interest in flares has remained strong, with the first new flare design awaiting installation and a second order in the computer modeling phase. ClearSign is expanding its scope from replacement burners to entire flare systems and thermal oxidizers, with proposals for these larger projects (valued at $0.5 million-$1 million each) showing a 10x increase in value year-over-year - The first of the new flare designs is out in the field waiting to be installed later this year, and a second order from the same client is in the computer modeling phase, expected to roll into a detailed engineering order in Q4 and equipment supply in early 2026[32] - ClearSign is receiving inquiries not just for replacement burners but to supply entire flare systems (burner, surrounding vessel, and structure) and thermal oxidizers, significantly expanding its scope[33][35] - The technology offers significant cost savings for customers by burning hard-to-burn fuel gas without the need to purchase additional natural gas[34] | Project Type | Estimated Value | | :----------- | :-------------- | | Flare Replacement Burners (with engineering & supply) | $200,000 - $300,000 | | Systems Projects (flare style or thermal oxidizer style) | $0.5 million - $1 million per unit | - The value of proposals for flare and systems products combined is approximately 10x higher year-to-date compared to the same period last year, driven by increased interest and scope[37] ClearSign Eye Sensor Technology ClearSign is advancing its ClearSign Eye sensor technology with multiple field demonstrations. The first commercial installation for a super major refiner is nearing shipment for a 3-6 month evaluation, with a second commercial proposal pending. Additional installations are planned for Los Angeles and the Zeeco test facility, showcasing the sensor on both regular and ClearSign burners - The ClearSign Eye sensor confirms the presence of a flame on the pilot in a burner, which is a critical part of control systems for refinery heaters[39] - Sensors for the first commercial installation at a super major refiner (Texas Gulf Coast) are almost complete and ready to ship for a 3-6 month evaluation period[39][40] - A commercial proposal for another heater's worth of these sensors for the same refiner at a different facility is pending the evaluation of the first installation[40] - Additional sensor installations are planned for a Los Angeles refinery (on ClearSign burners) and on the DoE hydrogen burner at the Zeeco test facility, providing multiple demonstration sites by year-end[41][43] - The sensor product helps demonstrate ClearSign as a technology solutions provider, opening doors for discussions about other products like M1 burners[44] Sales Pipeline and Market Traction ClearSign's sales pipeline has maintained its strength, with proposals at 2x the amount and project value at 5x the previous year. The company is increasingly being included as a requested technology by heater manufacturers for new projects, indicating growing market acceptance - The sales pipeline has maintained its strength, with proposals at 2x the amount and project value at 5x the previous year[45] - ClearSign's technology is now being included as a requested technology for evaluation by heater manufacturers for new projects, rather than the company solely finding clients in need[45] Outlook and Strategic Vision This section outlines key growth catalysts, addresses market challenges, and concludes with the CEO's encouraging remarks on recent developments and future prospects Key Catalysts and Future Growth Drivers ClearSign anticipates several significant catalysts for growth, including the imminent startup of major refinery heater projects in LA and the Gulf Coast, the installation of new flare technology, the launch of the M25 burner for a broader market, and potential regulatory changes in Texas - Upcoming catalysts include the startup of the delayed LA heaters project (major refinery, two heaters), which will serve as a very significant reference[47] - The Gulf Coast order, involving a leading heater manufacturer (Birwelco), will provide another significant market reference upon manufacturing, delivery, and early 2026 startup[48] - The startup of new flare technology and the potential for systems projects are expected to demonstrate the company's ability to deliver large-scale technology[49] - The launch of the M25 burner is anticipated to be significant for revenue and market penetration into a broader, higher-volume market segment beyond the ultra-low NOx niche[49] - Potential changes in Texas Commission on Environmental Quality regulations regarding low NOx burners could generate more opportunities in the U.S. Gulf Coast market[50] Market Environment and Challenges The company acknowledges ongoing market uncertainty, including concerns about tariffs and reciprocal tariffs, and delays due to unclear environmental requirements. ClearSign expects these conditions to stabilize, leading to a positive impact on business - Market uncertainty, including concerns about tariffs and reciprocal tariffs, and unclear environmental requirements, is causing delays in orders[51] - The company believes that market conditions will settle down and return closer to normal, which is expected to have a positive impact for ClearSign[51] CEO's Concluding Remarks The CEO expressed strong encouragement regarding recent startups, references, and technology developments, particularly highlighting the dedication and effort of the engineering team in bringing new technologies to market, which are expected to form the foundation for future growth - The CEO is very encouraged about the startups, references, and technology developments made over the last few months[52] - Recognition was given to the ClearSign engineering team for their focus, grit, and dedication in getting new technologies out to the market[52][53] - These new technologies are believed to set the foundation for ClearSign's future growth[53] Investor Q&A This section addresses investor questions, providing deeper insights into the Zeeco partnership, computational fluid dynamics, and financial clarifications Deep Dive: Zeeco Partnership Zeeco, a global combustion equipment company with approximately $1 billion in revenue, is a crucial partner for ClearSign, providing access to world-class test facilities and manufacturing capabilities. The partnership extends Zeeco's product portfolio into ultra-low NOx ranges, offering a significant financial incentive and broader market exposure for ClearSign - Zeeco is a global combustion equipment company with revenues around $1 billion, possessing the world's biggest industrial test facility and sophisticated manufacturing capability near ClearSign's office in Tulsa[57][58] - The partnership provides ClearSign with the credentials and essential capabilities (testing, manufacturing) to bring its technology to market[59] - ClearSign's product line extends Zeeco's portfolio into NOx levels that compete with selective catalytic reduction systems, offering Zeeco additional capabilities[60] - Zeeco's motivation includes a significant financial incentive from the high-margin ClearSign products and expanded commercial conversations due to the extended capability of the Zeeco range[61] Deep Dive: Computational Fluid Dynamics (CFD) Computational Fluid Dynamics (CFD) modeling is a critical tool for ClearSign, enabling computer simulations to predict complex flow fields, interactions, and heat transfer within combustion systems. This 'computer-generated MRI' allows for rapid design optimization and new technology development, as demonstrated by the M1 burner and recent advanced engineering order - CFD (Computational Fluid Dynamics) is a computer simulation that predicts gas flow, interactions, turbulence, chemistry, and heat transfer within complex combustion systems, acting as a 'computer-generated MRI'[63] - CFD is crucial for technology development, allowing rapid optimization of designs and comparison of different proposals before physical construction[64] - ClearSign utilizes world-class engineers and CFD capabilities, which enabled the successful development of the M1 burner without modification and the recent advanced engineering order[65] - Matt Martin, ClearSign's Chief Technology Officer, brings world-class skill and experience in CFD to the team[65] Financial Clarifications ClearSign's cash and cash equivalents decreased by $0.5 million from Q1 to Q2 2025, primarily due to cash used in operations, which was largely offset by substantial customer cash collections during Q2. The company also noted a steady stream of unannounced aftermarket, service, and engineering orders contributing to ongoing work and receipts | Metric | Q1 2025 | Q2 2025 | Sequential Change | | :----- | :------ | :------ | :---------------- | | Cash & Cash Equivalents | ~$12.8 million | ~$12.3 million | -$0.5 million | - The $0.5 million difference in cash balance represents cash used in operations, largely offset by substantial customer cash collections in Q2[66] - ClearSign receives a steady stream of unannounced aftermarket, service, and engineering orders (e.g., replacement parts, engineering studies) that contribute to ongoing work and receipts[67][68] Conclusion This section provides closing remarks from the CEO and details upcoming company events and communication channels Closing Remarks and Upcoming Events The CEO concluded the call by thanking participants and expressing anticipation for future updates. ClearSign will be attending the H.C. Wainwright conference next month in New York City and encourages stakeholders to follow developments on their website and LinkedIn - ClearSign will be attending the H.C. Wainwright conference next month in New York City[71] - Stakeholders are encouraged to check the company's website for developments and follow them on LinkedIn for behind-the-scenes updates[71]