Q2 2021 Clearsign Technologies Corp Earnings Call
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.
But our field testing and sales of <unk> products will be successfully completed with a clear sign will be successful in expanding the market for its products and other risks that are described in clear signs of public periodic filings with the SEC, including the discussion in the risk factors section of the 2020 annual report on the Form 10-K.
Except as required by law <unk> 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 is Jim Deller, <unk>, President and Chief Executive Officer.
So at this point I would like to turn the call over to CEO, Jim Deller Jim.
Please go ahead.
Thank you Matthew.
And thank you everyone for joining us today, the <unk> second quarter 2021, Investor update call.
This last quarter has been a mix of great progress and encouragement as we move multiple product lines through the technical stages of commercialization and customer engagement.
Admittedly I will say the past weeks have not been without some frustration and separately some sadness.
Before his thoughts and review the financial data reported in our second quarter 10-Q.
I want to remember the passing of our CFO, Brian Fike.
I'm sure that many of you saw the announcement that Brian Fike passed away at the end of July.
Collectively we are deeply saddened by Brian's passing of the entire <unk> community continues to mourn his loss.
And on behalf of our board of directors and employees, we extend essence cirrus condolences to his family.
Brian gave many years for this company and I want to recognize his contribution.
Brian was a great colleague and friend to all of that clear sign.
We will all miss him.
For reassurance regarding succession, we have engaged some very competent professional temporary staff to maintain our finance function.
Further develop and strengthen our systems for the.
Same time, we are working with a nationwide recruitment firm to find a next permanent leader of our finance team.
On the call today, I will provide a financial overview.
Then move on to our operational update.
In that regarding the major topics I will start off with an overview of our process burner business.
An update on our projects for the two international Super Major refiners and <unk>.
Also the performance and developments without operational installations.
We'll then move the discussion to our boiler burner business, while we have made significant developments since our last call.
In my remarks, I will address North America and China.
As well as the advances we have made in both our fire tube awards tube products.
After some general business related and closing remarks, we will open up the call for questions and answers.
Reviewing our financial data as reported in our recently filed 10-Q.
Our net cash used in operations for the quarter ended June 30 of 2021.
Two $7.0 million.
<unk> to $66.0 million for the same period in 2020.
I will go into detail on this temporary increase shortly.
Our cash and cash equivalents were approximately $16.0 million at the end of the second quarter of 2021, compared with approximately $17.0 million at the end of the first quarter.
<unk> 2021.
I want to give some details behind these numbers because we do continue to be very conscious of our expenditures plus we also have certain key projects and technologies to prove and to be meaningful it has to be done at industrial scale.
As these testing activities are a necessary step in the commercialization and adoption of our technology in the industry.
We're pushing ahead to complete them.
These tests will not be a permanent activity. So this will pass, but we are seeing increased cash consumption while at least.
Product pruning activities are in progress.
Primary among these is the expansion of our process burner capability.
And secondly, the pruning of our new fire tube Awards, <unk> boiler burner technology.
I will go into more detail regarding these product lines later on this call the key point.
Is that the increased operating expenses are not that change in our management philosophy, but a short term nonetheless, a necessary activity that will pass.
As stated in our recent 10-Q filings.
Operating expenses for the second quarter increased by 28% or just under $450000 compared to the same periods last year.
In addition to the increased testing costs referred to earlier during the second quarter, we made payments and accruals for the recruitment of a new leader for our finance team.
Additional cost required for temporary staff to maintain our finance function until the position is filled and.
And finally, an accrual for a severance payment agreed with Mr. Fink as part of his separation agreement.
To clarify timing. These payments were agreed to in April and therefore are included as an accrual in the second quarter.
As of June 30th 2021, the company has sold an aggregate of 1 million 92570 shares of common stock under its ATM program at an average price of $5 <unk> per share.
Gross proceeds totaled approximately $10.0 million.
Net cash proceeds approximated $8.0 million.
Shares sold in the ATM program in the three months ended June 30th 2021 total 151822.
At an average price of $61.0
It should be noted that cash received from our ATM program in the second quarter included approximately $2.0 million from shares sold in the last two days of the first quarter settled in Q2.
There were $31 million.
479454 shares of our common stock issued and outstanding as of June 32021.
We have confidence in our financial position and balance sheet.
And with that quarter, ending balances, we have sufficient working capital available to carry us well into 2022.
And that is without revenue from any other sources.
I will now change focus on address our major product lines, and we will start with our process burner technology.
As you will have seen from our press release issued September 3rd on a call the day before on which we were expecting to make arrangements for the final stakeholder performance demonstration for Exxon Mobil, possibly discuss the schedule for the delivery of the vendors we.
We will given verbal notification.
Testing on hold because of the time window to include the burners and the early 2022 turnaround ended in August and all the details required had not been finalized.
This news of a project called was both very disappointing and a surprise or a clear sign.
Upon reflection.
This change in plans, we have a lot to be encouraged about.
We have given the development.
Bob.
Process burner technology, great emphasis to the point that our burners on our capable of running on virtually any fuel blend required by refineries, including up to 80% hydrogen content.
We have demonstrated that <unk> run.
When situated so close together.
Almost touching each other.
Challenge in itself as as refinery engineers note.
They have turndown capabilities that match or exceed the usable operating range of most traditional business and can modulate up and down without human input placed on the demands of our refinery operating systems on all without unique five ppm capable Nox control.
For those in the industry.
Specialty customers and engineering companies.
And to enable everyone to be aware of what this means I want to take a minute and go into the quantitative details of these capabilities because they are important.
Place on core process, Ben is now run on fuel gases, ranging from natural gas to blends with up to 80% hydrogen content and can operate a return that range of five to one.
Non industry technology from 100% of design fine rates down to 20% of design fine right.
The bonus kind of light of smoothly on any fuel in that range, including from a cold start when the furnace is full of fresh air.
Depending on the heat the operating conditions, we will make nox guarantees typically between five ppm and nine ppm, including under the conditions just described.
Regarding proven operational site Nox performance, a formal third party emissions report multibillion infrastructure project has not yet been released but we did take our own measurements at the same time, which were consistent with those.
The outside measurement company.
But that project be guaranteed seven ppm, Nox and <unk> measurements indicated just over six ppm at full rates with a heavy hydrocarbon low pressure waste stream flowing in addition to the normal fuel gas.
We believe that where these bonus to run on mobile fuel gas alone the Nox performance would be even better.
Okay.
As a testing is running the test facility about partners Zico. They are very familiar with the development and capabilities of our technology. We believe that our relationship with Zika remains strong and that we are both looking forward to developing this business.
We have attracted great interest in our technology, both due to its nox control and ability to function at high intensity and in close confines and are in discussions with major multi site and global refiners seeking a bonus for both attributes.
We have other significant.
Our process burner project ongoing and in place.
The burner for the Super major global refining customer in Europe has been shipped.
Is on site and ready to fire up which is scheduled to occur early in the fourth quarter of this year.
This project will be the first installation of the major global refiner for the company and also the first in Europe.
While solving a need for a customer in Europe. It is our understanding that this is also a trial opportunity for this client to assess our technology for inclusion in their Nox reduction plans.
Particularly for the refineries in California.
We do look forward to completing the installation and startup and will.
An announcement when this has been achieved.
Our installation for the Fortune 500 infrastructure company continues to run seamlessly.
The data that we recorded and the results of the independent testing to the extent that we are aware of them have shown the heat the operating below both the groundbreaking emissions guarantee.
Some deals of which I gave earlier and my technical digression.
The formal report is still within the review period required by the South Coast Air quality Management District.
We do not know if any formal announcement will be made by them at the end of this period.
If we learn anything official we will pass that on.
It is quite normal for prospective customers to seek referrals from existing customers and we do know that the engineering company involved in this project has provided good references for us when requested by prospective new customers.
The bonus installed at World oil continues to operate at full rate and consistently.
We're in regular contact with oil.
As we mentioned previously <unk> is need to be optimized as they were hindered by a controls issues. During the original startup earlier this year and we are planning to return to modify those bonus to their original condition. When the refinery shuts down and this is anticipated to be early in the first quarter next year.
Okay.
In general we are seeing more and more interest in our technology.
It is a mix of clients with different needs and you are looking to address enacted project as well as those assessing technical and commercial options as part of future planning.
Budgeting processes for feasibility studies.
As we have said before I believe there is a great awareness of clear signs capabilities in the eyes of the industry.
We also need to recognize that we need success to breed success and that we anticipate being able to provide knowledge of successful installations HAE studies and similar references will be one of our most powerful sales attributes, especially considering the conservative nature of our industry.
It is also worth noting that all of the aforementioned projects, helping supply through our collaboration with Zika.
We've continued to be a very supportive and proficient partner.
In fact this relationship has provided.
Benefits and others.
Verticals, one of which I will touch on.
Coming up later in my commentary.
Turning to boiler vendors.
At the time of our last call we were awaiting a new USA fabricated 125 horsepower, but better to shift to the California boiler side in the Sadia, California in the center of the San Joaquin Valley.
That has been completed the banana arrived and California boiler install the better.
Fabricated fuel gas supply system and better controls.
We work together to fine tune the burner and finally conducted our first <unk> customer demonstration event with California boiler.
The demonstration went very well.
<unk> over 'twenty visitors from a wide range of industries, including the local regulatory authority.
The gas analyzer screen showing performance of the burner at well below two five ppm Nox and some other photographs from the event were posted on Linkedin, where we share many company updates.
The operation of this been a has since been independently verified by a third party source testing firms as meeting the local regulatory requirements.
Ultimately this demonstration also led to multiple requests for proposals.
The boiler into which our banners and stored as I ran from unit owned by California boiler and since the demonstration of the boiler has been relocated and is being set up for service at a milk processing plant, providing a great reference for us and our collaboration with California boiler.
Giving a customer third firsthand experience of a clear sign call Ben.
This also provides the ability to obtain ongoing operational data, which we will be able to share in support of future sales and marketing efforts.
To expand our product range, we now have fabricated and delivered a much larger 500 horsepower <unk> boiler burner to California boiler as per se they assigned.
<unk> is currently being installed and a second much bigger rental boiler we.
We are anticipating holding a customer demonstration event with substantially larger audience to show this burn in operation in October of this year.
This 500 horsepower size is critical to our plans as the regulations for new and existing boilers at this size and above and the California, San Joaquin Valley require.
Nox emissions below two five ppm, and we believe that there are no other burner technologies with our capabilities.
To operate near this level.
Even outside of the San Joaquin Valley region, the capability to provide a burner that could control nox emissions comfortably below payment requirements and avoid the cost of installing and maintaining selective catalytic reduction units <unk>. In addition to the operational demands handling the ammonia or urea.
Required to operate them as great value and interest from potential customers.
As environmental emission regulations are enforced and deadlines for compliance get closer.
The demand for this technology to grow it.
It also helps that our partner, California boiler has a well established operation in a long client list in this region.
Aside from the favorable market traction for these burners in California Rolling out this technology in the USA.
<unk> enables us to provide and optimize the burners, where we have our own technical resources to work on them.
And to then build and test some of the vendors in China for certification.
This allows us to maintain overall progress despite experiencing severe limitations in our ability to work in China as Covid makes it difficult to get personnel into China.
As I speak here today however.
<unk> of class on Asia, Manny Menendez has been able to enter the country, but is subject to a three week confinement.
Those through the quarantine process that is a mandatory pre curser to working on the ground in China. During these times of Covid travel restrictions.
Following the Finalization of our 500 horsepower burner and optimization of our fuel gas controls equipment. Our plan is to manufacture a copy of that been in China.
To repeat the certification process that we completed 125 horsepower Bennett.
We did not have the schedule for this to be finalized to date as we need a president in place on Asia to work out logistics without boiler manufacturer partner, there Jang Soo strong loan boiler company limited.
The situation is similar regarding out 125, <unk> boiler burner.
We announced the formal certification of this product for sale in China in May of this year.
Our next steps are to find the first adopter customers, but as we mentioned before we want to be both strategic and careful in the way that we go about this.
Primarily we see customers in areas, we have relationships with third party contractors to provide service and also installations, what we can control access trial.
Technology.
At least where we have a high degree of confidence that we can maximize the protection of our intellectual property.
Especially in these early stages of our product rollout in China, we want to be able to verify these credentials in person.
We also have developments of a water tube boiler burner I would like to report.
For anyone not familiar with the technology. These are much bigger where the small end of our boiler burner range is 125 horsepower burn that we discussed earlier.
<unk> boiler burner is 20 times the firing rate.
This is a legacy product that we have slated for redesign.
Following the same process is conducted when we developed the commercial design of a fire tube boiler burners.
The objective of the redesign is to provide a product that is supplied as a single piece and once designed camera.
Can be repeated.
Rather than having to custom engineer significant components to every product sold which we believe will enable our products to be produced and is stored in significant quantities.
While discussing this I want to recognize the great efforts of our CTO Dr. Donald Kendrick for the development of this new configuration and the scaling of the new design up to and including a water tube product.
The first one of this new water tube boiler burner design has been manufactured in Tulsa.
And as in the final stages of installation into a water tube boiler that makes up part of the test facility Zico.
Switching the initial activities of this project to Tulsa is again enabled us to keep momentum despite the COVID-19 restrictions in China.
In addition, operating this benefit the first time in the Zico test facility will enable us to optimize element any elements of the designed if required and to efficiently validate the operating sequence for the various fuel circuits involved.
And this large burner.
Upon completion this will provide a new gen new generation water tube boiler product been aligned.
It is pertinent to note at this point that Zika also has an operation including fabrication facility in Shanghai.
And we are underway producing a twin burner theyre.
Our plan is to arrange for the installation of that been in China and to proceed with the necessary certifications. However.
However, and I caution, we need to obtain an agreement with the Beijing District heating group.
And coordinate schedule.
Before this can happen and with Mr. Melendez, just arriving in China.
With some quarantine time ahead of him before you can make any in person meetings.
And considering the volume of activity that is required to complete this installation and Covid traveled work limitation scheduling and timeline is on ongoing working progress and yet to be defined.
While it has not received much coverage here we are actively promoting.
Our sense of technology.
On Lobo II demonstrates unit is in use to the extent our clients are allowed to meet external visitors in person.
We are presenting our sensor technology at the American Flame Research Committee conference in Houston. This October.
As well as add place on CT Corp.
Burner technology.
<unk> on the performance of our recent installations in a second presentation.
Before ending I am moving on to questions I want to provide a quick review of recent activities and events on the horizon.
We are happy that our first Super major process burner is installed in Europe.
Look forward to the startup which is expected in the fourth quarter. This year.
We believe our process burner technology is developed to the point. It provides for full functionality of standard burners. In addition to operating in tight quarters and delivering game changing low Nox emissions and in cases, where heaters are constrained by the size of additional benefit <unk> increase.
<unk> throughput.
Our process burner opportunity pipeline continues to evolve and we look forward to being able to make future announcements.
Our <unk> product in collaboration with our partner, California boiler has been demonstrated a well received in California.
This has led to significant customer interest in quotation activity on our part.
We look forward to moving this business to the truly commercial phase.
We have been able to return to China and look forward to re engaging with the heating districts and developing our product lines alliances and sales channels.
We anticipate confirming the design and operating protocols for our new advanced and redesigned one piece clear sign core water tube boiler burner product, which we anticipate will open up opportunities like replacing bonus for the heating districts in China.
We continue to stick to our asset light business model, which also means we do not have excess personnel.
Do believe we have quality.
Rather than quantity.
Over the past few months the employees of clear signs have demonstrated nimbleness and dedication.
We have been pushing out technology in multiple areas to bring it fully to market.
As we experienced COVID-19 restrictions affecting our ability to push.
Forward full pace in China.
Domestic boiler program in conjunction with California boiler was accelerated.
And this in a similar timeframe to us getting access to the water cube test boiler in Tulsa, enabling us to put the scaling our final design of that product into high gear.
In parallel.
We have developed that process burner technology to meet any normal firing process heat to demand.
In addition to the above we have a progression of new inquiries.
Requiring engineering and design input, which of course, we have been pleased to address.
I want to thank the place on employees for what they have done this past quarter, especially our engineers designers and project managers.
It has taken a lot of personal accountability and dedication to do what they have done.
And for myself and on behalf of the board of directors want to acknowledge and thank them for it.
That concludes my prepared remarks at this time.
Can you please open up the call for questions.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Our first question today comes from Amit Dayal with H C Wainwright.
Thank you good afternoon, Jim sorry.
Sorry to hear about July Matt.
Okay.
Hum.
It's been a pretty eventful quarter for you guys.
Just starting with you.
This Exxon news.
Did Exxon Covid somebody else I believe you know the answer to that but did Exxon Goldman somebody else rather than you guys.
And as that relationship pretty much done.
Okay.
So first of all the news that we received from Exxon was just a request on their parts to put the testing on hold.
Because the time required for.
For the engineering to include our burn is into the <unk> and the upcoming shutdown.
Basically in the window has passed.
It was a miss on timing, we don't believe there are any other burner technologies being offered on the market.
Today that can get close to what we offer.
I cannot speak Frac some form of.
<unk> knowledge of the market on what we're seeing there is no no other bone of technology out there so.
Okay.
So what we've got is what we've been told by Exxon. Although this was purely a timing mismatch and the window.
Past.
Obviously, we.
We're very disappointed we were really looking forward to.
Demonstrating those bonus.
We're looking at.
Now you asked about the relationship I mean, Exxon Michael refineries.
Very big potential customer this is a.
A speed bump in the revenue for US right Gabe we were looking to get at getting this demonstration.
In the field.
We have.
Yes.
Made huge and accelerated the development of our process burner technology to get it ready for the wide range of operating environments that Exxon presents us with but the result is that we are in a much better position now and we have a burden that will meet SEC.
<unk> remarks virtually any.
Operation.
Any normal operation of our process burner.
And the industry.
No.
They are.
Like all refineries.
We do foresee nox reduction requirements, especially being imposed by the.
Regulation authorities and first among those being California, and the <unk> in the Texas Gulf Coast area.
Excellent so a very big client and.
And we really look forward to a lot of future business with them.
This is just an unfortunate timing.
And one referenced we were looking to get in the field that.
At least from what we told is not scheduled for the current turnaround.
Next year.
Okay.
Should we assume that you are still in touch with Exxon.
There is some level of dialogue still ongoing with Exxon.
Oh of course, yes, boring touch with what the team and long term again, I mean, Exxon has a big refiner they have a lot of assets in the Gulf Coast region.
We believe that there is going to be going to the emission requirements. There. So we actually see them as a very big and very important customer and we truly value the opportunity of business with them down the road.
Okay.
Move on to.
So sort of the associated relationship with Zico.
At least initially the understanding was that the.
Zico partnership was somewhat dependent on Exxon coming through and you know above deployment coming through for you guys.
I know you've commented that the partnership with <unk> to have supportive et cetera.
What do you now need maybe sort of.
<unk> agreement with vehicle that is independent of little bit of the Exxon.
The fire.
Or is that not necessary.
It's.
The Exxon past the news onto our slate Thursday last week.
We do have a very good and close relationship with Zico in impact.
First of all I made was was to the owner just just to explain.
The coal we had an Exxon we're running out of time for that their turnaround.
Can you confirm that that relationship remains strong there.
Okay.
The testing that we're doing.
It is being done.
At the Zico test facilities, our engineers on the Zico engineers are working hand in hand.
All in that testing, they're firing our burners with us so they are intimately familiar with.
The developments, we've made to the technology and the capability of our technology.
But also.
The.
Interactions, we have with customers and all the inquiries and quotations that we're sending out those quotations are typically needing obviously the bonus we fabricated at Z code and they will be testing the scheduled in the in the Zika test facilities.
So obviously you said, it's kind of an internal relationship, but they have knowledge all of.
Of the traction and the market interest.
And <unk> as well.
So the the XOMA agreement was referenced.
As we set our initial collaboration with Zico, but they are.
No very much engaged with us I believe we are both looking forward to growing this business and just as an aside I mentioned the the.
<unk> bought a bedroom as well.
That boiler burner is being tested at the Zika facilities they have expanded their <unk>.
Product lines that we are working with them on it.
For testing they manufacture the burner in Tulsa, but also because the very big market for that water tube boiler burner is in China.
And they have a fabrication facility in fact.
Very active office in Shanghai, they're actually fabricating a twit a twin burner for us.
So we have.
Ongoing unexciting engagements with Zika.
Okay understood and then maybe just one last one for me with respect to the China opportunity.
Is.
Is expecting any deployments or revenues from China in 2021.
A bit aggressive.
Or is that still possible.
It's.
It's still possible to mix.
As we've said the.
The COVID-19 travel restrictions have persisted.
Much longer and much more strongly regarding travel to China than we.
If we ever expected.
We.
We do want to make sure primarily that we protect our IP and so where we do make our first sales we want to make sure that we do those or select those customers carefully.
And I do want to make sure that our.
And as the president that the close on present in Asia.
The visit those sites and just to make sure that we are installing these burners for first units into the right facilities and because of that caution.
No it's possible, we'll get some sales this year.
Really want to prioritize safeguarding our IP over just rushing to make a satellite and everyone's waiting for a sale, but we've really got to look at the long term business.
So.
I guess the short answer is it's possible but.
<unk>.
It's <unk>.
I am sorry, not wanted to give an impression that it should be expected.
Okay.
I'll take my other questions offline Jay Cozzolino for now thank you.
Thank you Matt.
Our next question comes from Jeff Stein Glass, a private investor.
Hi, Jim.
I think you just touched on this but I just want to follow up with it given the news from Exxon in their delay do you think that this says.
Awarded or any way reversing the traction you have with other supermajors or refiners and process burners inside those refineries.
I mean.
Jeff The short answer is no, but let me give a little background.
Obviously, we're very disappointed to hear from.
<unk> and we're looking at again Theres been demonstrated.
But as we we need to take a step back and.
Okay.
Look at what this really means in the big picture of our strategy and the reality is that we continue to execute the strategy that we started when I first joined clear sign back in early 2019 announced.
And that was develop a technology that would make it easy to use and easy III incorporates.
In our customers our refineries in the business and then to engage with collaborative partners, who are well established in the industry.
To provide.
A channel to market and to help us conduct our business.
And that has not changed.
I don't want to belittle the disappointments.
But the the Exxon asking us to put the testing on hold affects the timing of of one installation.
The bigger outcome is through the engagements and as I mentioned very with a man we have accelerated the development of our process burner technology.
Point that it meets virtually all of our final needs are.
Matches.
The operation of.
Regular bonus.
In addition to of course, we've maintained.
Our Nox control and the value we can offer to enable our customers to avoid having to install.
<unk>.
Yes.
Our first.
If a major installation when we're talking of references is installed and ready to be started up.
In Europe.
I'm not aware of a list.
A single comment from customers or for that matter of fact anyone in the industry.
Sure.
Regarding the Exxon Mobil, a request to put us on hold.
What we have seen is a notable uptick in customer engagement based on the operating operating capabilities that we've been able to develop for our process burner over the past few months.
Got it yes. Thank you for that I just wanted to thank you for clarifying that I appreciate it.
Thank you Jeff.
And again, if you do have a question. Please press Star then one to join the queue.
Our next question will come from Robert Harvey a private investor.
Hi, Jim.
Thank you for your earlier comments.
Sorry, you had to deal with the two big issues you had this quarter here.
Can you say a little bit more about the demonstration.
<unk> has to use the language put on hold this was going to be.
This is not a further testing of Zico facility. This was to be a pause.
<unk> install or something at an Exxon facility I mean like what.
What additional evidence they need it.
It seems.
Surprising.
I believe that early earlier, we're talking about an installation possibly.
One of their refineries in 2021.
It was delayed to have further testing to demonstrate broader capability.
But.
Can it be a surprise that suddenly at the end of August.
I didn't have the data they needed.
It sounds like with Veeco, you demonstrated all the capabilities that they need it I mean is this the hurricane that has like switched manpower at Exxon.
Baton Rouge, Roubaix detailed or.
It just.
It seems like suddenly the deadline snuck up.
I mean.
These things are done very carefully with long lead times.
Just.
Having a problem understanding that so suddenly a surprise put on hold means that they are coming back to do it what.
Jan of 2003 or like what can you say about what you think their thinking is.
Well Robert.
Thanks for the question.
I'm not going to percent too.
It's not my place to try and speculate as to excellence thinking what we know.
So.
We were looking forward to demonstrating these bonus.
The operating criteria that I went through.
We believe met all of the requirements.
We will look we expected on the coal that we were going to be able to arrange for their that final witness and hopefully for the <unk>.
How to transport the bonus that the site where expect to talk about logistics.
We were extremely surprised when they asked us to put the testing on hold.
I don't believe the.
I don't believe the details where from our side. There is a I am speculating there is a lot of engineering that goes into a turnaround.
That obviously takes some time and if they.
There is a time window that that.
Now you have to commit.
And we would just hold that that time window.
Past.
Okay got it.
In terms of emissions requirements, and then you mentioned the California requirements.
For refineries.
The Texas.
The requirements.
Just there is an awful lot of talk.
Ed effort and fill up going on.
Responding to climate change in the <unk>.
My understanding nitrous oxide is 300 times more damaging.
To the environment and carbon dioxide.
If you had extra funds is their lobbying.
If you would do.
Or are there more regulations coming.
From others or whatever what what can pressure the marketplace.
Purchase your product suite.
Sooner rather than later.
I could go on at length.
I think if you honest.
We all care about the environment, we all once.
No.
Or like things to move faster.
In that regard.
Okay.
No.
As a as a burner manufacturer we.
We try and solve the need we have customers that need our products to meet the emissions.
The emissions requirements.
And we believe what we have hearing clear sign.
As a very special opportunity to enable them to do that.
A very cost effective manner.
I think the.
Yes.
There's always politics, but I really need to stay focused on our customers to be honest.
We're very aware of the regulations, we share information with the regulators because that.
Helps us understand what theyre looking at.
I think it helps them improve that plan. So we have to engage with them as we as we have on the world oil project that wasn't active participation.
With the South coast Air quality management.
District in California.
Uh-huh, but from yes from my side.
Running the business on especially appreciating that at the end of the day the oil refineries all of our customers. Our goal is to help them meet their needs and to be good environmental stewards in the most efficient.
And effective ways that they can.
Thank you.
Our next question comes from Robert <unk>, with Las Colinas Capital management.
Hi, Jim.
Im alone.
Ask you something about these process heaters.
Okay.
Coming to customer.
With a 10 foot flame.
To replace their two inch coil.
I would think you'd go to redesign.
The heater.
But we're coming to them with too little claim from.
As dawn.
Many feet on us this turnkey considerably.
Considerably large claim.
Right.
Would that work.
In any of these existing heaters.
As far as any kind of design changes grows.
You see where I'm going with this.
Yeah. There is no killer products should be he was a fit.
Just just to me.
For my little brain.
Yes, Bob.
Youre right on the money.
There are two big advantages that.
<unk> been especially cliffs on process furnace offer into the market. We tend to we do talk a lot and very bright you said, we talk a lot about nox emissions.
But the other attribute is our claims or <unk>.
Significantly smaller.
Okay.
Sure.
They're not two inches, but they are significantly shorter than the flames of traditional.
Hello, and ultra low Nox burners.
And the flames, although traditional bed as do cause problems because when the flames along by overheat. The insides services all the heater and the result is that the operator has to tend to find right down to avoid damaging their equipment.
You have a situation where for example, the heat as we're talking about raw crude charge heater, which restricts the flow through an entire refinery if the throughput of those he just has to be turned down.
It.
It reduces the or the capacity of that refinery to make product.
So the other advantage that we have.
And having much more how much will confine flames.
Is that we can actually go back and fit our technology into those heaters, usually improves the nox emissions.
More importantly for those refiners is we can actually great or enable them to increase the firing rates and throughput.
All of those heaters.
So that has a very immediate.
Obviously the value to refineries is very easy to calculate.
And in circumstances, but Bob to your point that that is exactly a very real opportunity for us and one that we are we do have.
A significant traction on so.
We're talking to customers not just about Nox emissions, but we are talking about throughput increases.
In addition to that okay.
Okay.
Following with the same line of thinking.
This shipment to this went to Europe.
So the other super major.
They're going to be operating one of these burners I assume since you and I talked before about each one of these <unk>.
Signs of these heaters can.
B III burners for burners, whatever and then the configuration are.
Are they going to.
One burner with.
With other burners and the heat or two.
That's going to be next to it.
Dan how they work.
I don't understand how they would operate.
It doesn't seem like you'd really be getting real information.
<unk> combined with <unk>.
Well, yes, we have.
Sure.
We're not allowed to disclose the details of our customers' equipment. So let me.
So let me talk in general terms. They are all certainly there are there is that's what we call cabin heaters, which I'll square boxes.
And then vertical cylindrical ages.
As the name suggests that all basically MRI cans.
This vertical cylindrical heaters have been as a range typically in a circular pattern and therefore.
Whether it's <unk> <unk> on the very small ones have a single burner in them.
Hum.
Okay.
Sure.
Based on that.
We also plan to complete burn a hole for this heat. So it's a very small heater in Europe about this brand is going to.
It will enable the customer to get.
A very good appreciation for what <unk> can do it will not be mixed with other business.
Alright.
Our global gone on the solar lineup.
When you made these installations of PS.
Louis customers on the West Coast.
I think you call it the transportation and storage customer.
Index base the configuration of the burners that you were putting in was replacing.
Other burners with those basically the same consideration so there really wasn't a bit engineering pass.
Some of them to do is that correct.
That's correct.
That goes back to our strategy right from the start the objective thing that we need to develop our technology to the point.
That is easy to deploy and in terms of functionality and putting into a heater.
It just plugs right into the whole of the <unk> or the existing budget that cuts down the engineering cost.
And.
It makes the turnarounds are very simple.
Those Budd is just with.
Although California boiler team <unk> been at Al <unk>.
Reconnected the field gas piping.
Some minor modifications on the on the on the.
Control system for some different.
Unrelated details I just find them up so it's a very easy like for like.
Jeff.
Right.
Could you give us.
<unk>.
This call.
It seemed like everybody was there.
Very excited about the name Exxonmobil and.
China, though.
The accomplishment.
Could you just.
So there could you just kind of give us some idea of pipeline for.
Or.
Inquiries or however, you want to characterize or whatever you're comfortable with as far as for them.
For our burners for that.
For that part of it.
Of the business.
Yes.
Obviously this is something that we watch and ordinary.
Im very encouraged about.
Just just by their nature.
Okay.
We can't we don't control our customers so I really can't go into.
Names and dates I can say that we have customers that we've engaged with.
That range from.
No.
Global Super majors for you too.
Smaller local refineries and some national scale refineries still with multiple pieces.
Applications include Nox reduction and capacity expansion.
So it is.
It's a growing pipeline Bob I really unfortunately, I can't go into details just because it is so speculative I don't want to be misleading.
Almost all of them just total so that everything was laser focused on this big name Exxonmobil.
Of a sudden that those who so I'm, just saying that there has to be other business out there.
I would imagine I think you've alluded to.
Yes.
Conversations with just the fact that we were able to do this.
Demonstration.
Or that company.
Open the door to a lot more inquiries.
Am I right.
Well I think the.
Yes.
I think what's happened is we've used we've used excellent net exxonmobil was named too.
To really.
Describe the project.
I think the more accurately we recorded the process burner development projects and what the industry has been watching.
Is the capabilities and the performance that we've been able to achieve because we're actively talking to.
Customers and the industry experts so as as we've been able to improve and achieve this performance by process furnace.
That's the news that we are passing on and that's what's leading to two the interest and engagement that we're getting.
So whilst we have the Exxon name associated with it is what everyone recognized the I think the reality in in terms of the actual benefits and where we are.
I would probably need to refer to it as the process been a development project.
And then overall.
California boiler.
I suppose with the.
Total horsepower is that.
A bigger portion of the market.
Smaller ones.
Yeah.
A larger market to address.
So.
Yes.
Above the key is really the key to that 500 size enough is the San Joaquin Valley is the one region to formalize there.
Nox emission.
Regulations revamp that was done.
Okay.
Quite recently, but the 500 horsepower the Nox emission requirements dropped down to $6.0 five ppm.
At that 500 horsepower size and above.
So that puts us in a very special position now.
Ultra shipping success in this demonstration.
We obviously believe that thats.
To be expected.
If we can do that.
We are in a very new.
Very unique position and the only alternative that we're aware of is for customers to put a selective catalytic reduction unit.
On a boiler switch if you think of a few.
Food processing plant or something of that nature going to the extra complexity walnut cost of installing such a piece of equipment and then maintaining ammonia.
And handling the delivery is that that is extremely burdensome. So we really believe that we have a an extraordinary value.
About 500 horsepower and above so that's that's one of the reasons that we've really picked that size. In addition, california boiler half of eventual boiler of that size.
Now we can work together to fitness banner into and then to deploy into the field to give.
<unk> firsthand experience.
Or is it not better.
We are very sorry that I can't size for us.
Yes. Thank you.
Okay.
That's a level of scale.
Relationship with equal.
So its problems.
Also also now with the one or two people.
It goes on both of those businesses.
Is that wrong.
Yes, yes.
I mean, we're in ongoing discussions with deep with Zika regarding the <unk>, but thats.
That opportunity for us to test them and to have Zika fabricate that that is really based on the strength.
Of the process burner collaboration.
That we have developed.
It is also the <unk>.
<unk> boiler burners, we have a formal agreement in place and I'm very pleased with the agreement in place with California boiler.
Okay.
Jim.
Thank you Paul.
Our next question comes from Marshall crowd, a private investor.
Yes.
<unk>.
Yes can you hear me.
Hi, Marshall, Yes, we can hi, hi, Eric Yes.
Yes, you had mentioned earlier I believe it was.
World oil.
Facility that.
A correction had to be made because it started up cold.
The burner started up cold and so you had to go in and you will have to make repairs I believe FERC readjusted is that right.
Are you familiar with what I'm speaking of.
Yes, I am.
That was a.
Okay.
I'm just wondering how often that has it.
No. This is this is a.
Hey, one off there's basically a couple of hours and the control system. Just just the way it was configured that didn't fire at the right time.
That led to some minor damage, but damage that we just want to take the opportunity to repair.
So this is not a normal well this is just.
One of those one off things that that happens.
Okay, all right very good.
Alright, thats going forward looking forward to.
Tomorrow.
Thank you.
Thanks Martin.
This concludes our question and answer session I would like to turn the call back over to Jim Deller for any closing remarks.
Great. Thank you very much this concludes the investor update call for the.
Second quarter 2021.
I look forward to speaking to you all in the future.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.