ClearSign Technologies Corp Q3 FY2024 earnings call

• Financials: Q3 2024 revenue was ~$1.9M, YTD revenue ~$3M. Gross margin improved, but one-time accrual from China operations suspension affected profit.
• Process Burners: Large order from California refinery (20 burners), another large order from a Fortune 500 petrochemical company (26 burners via Birwelco USA), repeat orders from Kern Energy, partnership with Zeeco for joint branding of ClearSign process burner line.
• Horizontal Process Applications: New product line with repeat orders from Exotherm, Devco, etc., using ClearSign burners in midstream heaters, expanding national footprint.
• Boiler Burners: California GET program report showed 4% energy savings, large boiler burner installation in California, sale to asphalt company using standard burner model, third-party validation of financial case for boiler burners.
• China Operations: Suspended operations in China, putting business in dormancy with minimal ongoing costs.
• Flare Product Line: Customization of flare burner element, potential for solution provider role in new energy projects with California's new emissions requirements.

For the third quarter of 2024, ClearSign recognized approximately $1.9 million in revenues, compared to $85,000 in the same period of 2023. The year-over-year revenue increase was driven by the shipment of multiple process burners to a California refinery customer. Year-to-date revenues for the nine months ended September 30, 2024 were approximately $3 million, the largest year-to-date figure since inception. Year-to-date gross profit margin increased from 22% in 2023 to 33% in 2024, but was offset by a $394,000 one-time accrual related to suspending China operations.

• Margins expected to improve further with efficiency gains and volume.
• Pipeline of projects utilizing new flexible fuel hydrogen burner, largest ever pipeline.
• Boiler burner product line with third-party validation and large installation in progress.

• Uncertainty in field testing and sales of products.
• Risks related to expanding market for products as described in SEC filings.

Q: Directionally, where do you see margins heading?

A: As mentioned, there is room for efficiency gains and margins are expected to improve further than the improvement reported in financials.

Q: Insight on Narion and ClearSign eye sensor technology?

A: Narion is an independent company developing sensing technology applications using ClearSign's sensing tech, including for aerospace with longer-term potential.

Q: Color on new hires?

A: Hired two engineers to free up CTO and business development team to focus on customer-facing roles, with no current open positions but expecting more as business grows.

Q: Pipeline compared to a year ago?

A: Pipeline has grown substantially with bigger orders, more mature inquiries, and multiple weekly inquiries.

Q: Impact of new administration on NOx emissions?

A: NOx emissions controlled by states, focus on decarbonization is periphery; increased interest in LNG may benefit horizontal process burner business.

Q: Essence of relationship with Zeeco?

A: Joint marketing of ClearSign products, Zeeco's global sales team promoting ClearSign technology under a dual-branded process burner line.