ClearSign Technologies Corp (CLIR) September 2026 Conference Transcript

All right, we're going to go ahead and get started here. Thank you, everyone, for coming. My name is David Chomiak. I will be moderating this meeting today. I'm an investment banking analyst here at Wainwright on our equity capital markets team. Here with me today is Jim Deller, CEO of ClearSign. I want to give as much time as possible for him to run through his presentation, as well as some Q&A at the end. So, Jim, the floor is yours.

Thank you very much. Well, good afternoon, everyone. As I said, I am the chief executive officer of ClearSign Technologies Corporation. We're an industrial technology company. We are a public company listed on NASDAQ with ticker symbol CLIR. We sell pollution control equipment to clients like the major oil refineries, petrochemical companies, and energy companies around the world. We are a technology company. We have very valuable IP that allows us to sell our technology at high technology level margins. We are generating revenue, we are making sales, and we're at a point that we have significant traction within the industry. What's key is we're in a very conservative industry and it's very important for our clients that we have equipment that's out and operating in the field, so getting to the point that we have significant references is very important for the development of ClearSign. So before I go on, you've seen many of these, I will not dwell on it, it is important. I will be making forward-looking statements in this presentation. So I said, we are a technology company. Our specialty is combustion. We make flames. What's important within the flames is when you understand the structure, you can basically design a flame and control the mixing such that we make sure the flame does everything it needs to do. You can turn it up and down, it delivers heat, but we can do that also in a way that we can make sure that flame does not make pollution. This is a really big deal because in today's world, pollution control is a very big need of oil refineries. You can either clean it up after the fact or even better if you don't make it in the first place. So try and get our arms around the problem. As more and more people are driving cars, we've got more petroleum, there's a greater growth in population, there's more hydrocarbons that are being consumed. As those hydrocarbons get consumed, there's more and more pollution developed down at ground level. As that pollution crosses a threshold, the EPA will lean on the local regulators, and they are then basically forced to implement tighter regulations on the industries in their A typical large-scale oil refinery will have between 40 and 50 heaters on the oil refinery. For them to use the existing typical technology on all of those heaters, they're looking at a cost of somewhere in the region of half a billion dollars. They also need to be able to burn fuels that operate over a wide range. As they process oil, they get a lot of off-gases or waste gases coming off the oil. That gets fed into their fuel gas system. It basically provides them feed fuel. So the combustion equipment has to operate over a whole different mixture of fuels that can swing wildly and look into the future up to and including 100% hydrogen. We have a client currently in California, and that single project of theirs, they've given us numbers that to use the existing technology called a selective catalytic reduction system will cost them in the region of 50 million dollars on their two heaters i said for a typical larger fine they could be looking at costs of up to half a billion dollars that kind of number is restrictive on the findery it it could even jeopardize future projects or the expansion or the viability of the entity itself so if the solution at clear sign right we have with our special burner technology, we can not make that emissions in the first place. So we can take out the existing burners, we've developed our product to be easy to install, it's easy to operate, and it's basically a low-cost solution for our customer. So for that one California refinery, where their SCR project was going to cost them about $50 million, our estimate for them to use our technology is in the region of $10 million. In addition to that, with our ability to control the flame, There's cases we actually have the ability to help the clients operate their equipment more efficiently. We can reduce downtime and increase their productivity. So if you look at the products, the bulk of our revenue comes from process burners. These are the burners that go into all the fineries, petrochemical plant, et cetera. These projects are highly customized, they're white glove service. We have a standard burner technology, but this product has to be designed to work with their exact fuel gas for that specific heater. The product has to be demonstrated at full scale before we go into full production. So while these are high-value products with there being many heaters or many burners in a single heater, while the projects will run from $1.5 to $3 million, the cycle time for is also quite long from the time that we start getting inquiry to the point that this equipment is out in the field and up and running is typically about two years but mixed in with that we have burners going down to the midstream industry these are much more simple heaters it's a standard product these two turn much quicker at a typical projects will be one to three burners they turn much more frequently but with a cycle time in the region of three to six months And then on a third product line, the flares, a flare is basically a waste disposal system. These either go into a upstream drilling area where they have off gases that need to be disposed of, or a biofuels plant where there's off gases. In this case, we sell the entire structure typically in the range of 750,000 up to one with manufacturing right now or is being installed I felt one and a half million and these will turn in about six months to one year typically these are not just pipe dreams these are products that we have going out the field right now so process burners the one on the left is actually a job that we sold back in 2000 this is a very early project of ours that project still up and running today the reason we highlight this is that we We have good data for the SCR cost and for the ClearSign installation. The reason is that when we went to the engineering company that installed this project, they had already sold it using the SCR technology. We explained how our equipment worked, what it did. They took that proposition to their customer and their customer agreed to change. So we then displaced the SCR project with a ClearSign solution. As a result of that, we have actual numbers. So this is an extremely small heater. It has only three very small burners in it. The cost of the SCL project to the customer was $2.7 million, but the cost of the ClearSign solution was just under $5 million. We have a project down in Texas right now that's due to start up. It's going to be installed next month, due to start up in November, with 26 burners right down on the Texas Gulf Coast. We have another project in progress for a California refiner. This is the one where we're saving them $40 million. That one's in the engineering phase now. The first fee is due to ship out next year. For the midstream products, right, we've had all following clear sign. You'll see there's been a flurry of press releases recently with burners going down to the Midland region in the West Texas Permian Basin. This is a growing industry. Our first burner was sold for a permanent requirement of 8 ppm. We guaranteed 8. We started up and demonstrated 2. This has become a very popular product line, right, we sell them in batches of 1s and 3s, but if you look at the press releases this year, this has been a very big sale for us. And then finally, the flares. So we had our first formal flare test. The first one installed was run through its emissions measurements, and we got those results back just over a month ago. We came in at 16% or 60% of the allowable level. Knox is measured in parts per million. The requirement's 15, so we came in at eight. We have a second flare being instructed right now for $1.5 million. That's due to start up later this year. And that client has told us they have two more permit applications in progress based on clear sign technology. So the industry this side, this is truly a global need. It's a very prominent pain point for our customers. It's a very high-value one, and there are some global players in this market. You'd expect that this was significant competition. Johns Inc. is owned by Coat Brothers. Caledas, my previous employer, is owned by Honeywell. Comparing ClearSign to these, we have a burner that's easy to install and easy to use. It's designed to be operatable across all the fuel range that we see on a common refinery. we get emissions down to the level required by the modern regulations. Obviously, our IP is very valuable. It is protected. We have a significant IP portfolio. But the fundamental way that these burners work is protected, in addition to patents protecting the designs of the individual product lines. So trying to get our arms around the market. The combustion equipment market is truly billions of dollars around the world. But to try and get something significant to what we're dealing to make it meaningful, We estimate that the market for low NOx combustion technology is in the region of $1.2 billion. If you slice that down to the market that's really addressable by ClearSign technology, we're looking at about $300 million per year. And then finally, if you look at the obtainable market today, with the products that we have in operation today and the emissions requirements where they are today in the regions they've been implemented, we think there's an obtainable market for ClearSign today of about $100 million per year. That's significant when a revenue of $16 million, we believe, will get ClearSign to break even. So how do we make money? Up until now, we've typically sold products or equipment to the clients with a margin, and we're shooting for about 45% margins. They'll be running at technology-level margins. As part of the growth, it's obviously a lot more efficient. When we have customers have the ability to manufacture equipment, to convert more of a licensing type model so we have our first projects in progress today where we have actually licensed our drawings to a client and they are building burners based on our drawings the good news is we've been able to maintain the same margin dollars on those licensed product sales as we do when we're selling the equipment ourself so this is a highly scalable uh means for clear sign to grow in the future and what is really important is the third leg, which is the aftermarket service. We're seeing the equipment that basically exists in flames. There are consumable parts on this equipment, and those consumable parts have to get replaced periodically to keep the equipment running as it should. The more equipment that we sell out into the field, then the more that aftermarket service is going to grow on an ongoing basis. Based on my prior experience, the profit from the aftermarket business over time can actually become the biggest profit generator in a combustion equipment business. So look at the traction we've got and why now. The lowest emissions and the first low emissions in the United States were developed in California. So as you'd expect, the bulk of our installations are in California. What's critical now is the Texas Gulf Coast, our biggest customer base, are just rolling out new emissions in that region. And we're seeing a significant inquiry from customers in that area. This is a very conservative industry and our customers are looking for reference sites and to see our equipment up and running to be confident in choosing. We believe that the economic justification for choosing ClearSign is evident. What is holding them back is just the trust of all this new technology. So getting these new reference sites out and running in the industry is critically important. We have a 26 process burner order in boxes down on the Texas Gulf Coast, about to be installed and started up in Q4 of this year. That order was managed by probably the preeminent engineering company in the United States for refineries red-fitting the heater. So there are a lot of eyes on that site. And we actually have clients telling us of a large number of heater projects they want us to address once they're confident in that site starting up. We have a big flare project starting up in California with clients who have permits in progress based on our technology. We have a lot of burners now going down to the Permian Basin, giving us great references in the midstream industry. We are a small company in a truly global market. Our clients require demonstration of our equipment at full scale, they require manufacturing in accredited facilities. We need to keep ClearSign asset light because obviously we are funded by investor money and we are not at the point of break even at this time. So we had to develop a strategy to enable us to operate like a global major whilst keeping ClearSign asset light. We've done that through a strategy of collaboration and partnerships. We moved ClearSign from Seattle into Tulsa and formed a collaborative partnership with Zico. Zico is a $2 billion a year combustion equipment manufacturer. they are one of the biggest in the world. They have manufacturing on every continent, they have sales and support on every continent, they have sales and service people embedded in virtually every refinery in the United States. They have the largest demonstration and research facility in the world and they have a manufacturing shop that's accredited by almost every refinery in Petrochemical Cloud and they're about 15 minutes drive down the road from on our Tulsa headquarter. They have also co-branded ClearSign technology. So Zico now carry ClearSign products under their own name. What that does is that allows ClearSign to sell combustion equipment competing in the marketplace against the SCR technology to meet the tightest modern regulations. For ClearSign, it gives us access to their world-class full-scale demonstration facilities and our equipment manufacturers at Zico. That gives us instant credibility in the market. Also, when we sell our equipment into heater manufacturers, that enables them to sell a heater product to their customers compliant with the latest emissions regulations. As they get to know our products, they continue to promote their technology using the ClearSign burner equipment. They essentially become an extension of our sales team as they take those products out to new customers. So we try and track, obviously, all of the quotations we have out But we're finding there's cases where the heater manufacturers are quoting projects and talking to customers beyond what we know about. We find out when they start to become very active, and then they come back to us just to clarify the details. So it's a big part of being able to develop this country and get this traction in the The people on the team are extremely important. My background, I have a doctorate in flame chemistry and flame structure. I moved to the United States in 1996 to join a company called Calidus that was then purchased became part of Honeywell. I ended up running that business under Honeywell. Jeff Llewellyn ran the burner business at Catalyst while I was there. He left and joined ClearSign just a couple of months after I did back in 2019. And our Chief Technology Officer Matthew Martin is a computer scientist by background. He's also one of the best self-taught engineers I know and he is a world-class expert at a computer modeling capability for flames and combustion. What that means is we can simulate flames and how flames are formed on burners in a computer before we ever bend metal or put it into practice. That allows us to develop the technology we do and to develop it very quickly. Beyond that, it allows us to show customers how their equipment will run with our burners installed as part of the sales process to give them confidence of what we can do for them. And then lastly on this slide, if you look down at the directors, the last director that joined us just earlier this year, Mr. Larry Sadler, I first met Larry back in the late 1990s. When I was working at Caledas, Larry was working on the ExxonMobil Baytown site. He worked up through ExxonMobil to the executive level and ended up being their sponsor or their overseer or lead engineer of all of their heat transfer equipment. So he has extensive knowledge, not only technically of the industry, but also how our refineries look at new products, how they assess new technology. And it's a fantastic asset to the board and to us understanding how the refineries will look at our equipment so we can position it and present it properly. So that's actually a quick look at ClearSign. So as of our last 10Q, We've got, here we had just under 10 million in the bank. We have cash on hand to sustain us for at least two years, which we believe is time to get the company to break even with the traction and interest that we have. We have a very robust IP portfolio. We are registered in the state of Delaware. Have a quick look at the recent press releases at the top. You'll see the appointment of Larry Sadler, our last director. You'll see a whole flurry of the M-series burners. Those are the burners going down to the Texas Permian Basin. We've had a lot of sales of those earlier this year. There was, on May 14th, it was the next stage of the burner going out to the California refiner. This is the one where we're saving the client $40 million. And there is a, right at the bottom is a last flare order. So with that, our contact details are on the screen. I do have time if there's any questions. I appreciate everyone's attention.