Q4 2023 ClearSign Technologies Corp Earnings Call
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Operator: Good afternoon, and welcome to Clearsign Technology's fourth quarter and full year 2023 conference call. All participants will be in listen-only mode.
Good afternoon and welcome.
Fourth quarter and full year.
Sure.
Speaker Change: All participants will be in listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star, then the number. Please note, this event is being recorded. I will now like to turn the conference over to Matthew Selinger of FIRM IR Group. Please go ahead.
Speaker Change: You need assistance, please signal conference, especially.
Speaker Change: Our key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Ask a question you May press Star then one on your phone.
Speaker Change: Let me draw your question.
Speaker Change: And then number two.
Speaker Change: Please note this event.
Speaker Change: I will now like.
France over to Matthew Selinger affirm I R.
Matthew Selinger: Good afternoon, and thank you, Operator. Welcome, everyone, to the Clearsign Technologies Corporation fourth quarter and full year 2023 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.
Matthew Selinger: Please go ahead.
Matthew Selinger: Good luck.
Good afternoon, and thank you operator, welcome everyone to be clear, sorry Technologies Corporation fourth quarter and full year 2023 results conference call. During this conference call. The company will make forward looking statements.
Matthew Selinger: 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.
Matthew Selinger: 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 statement. 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 public periodic filings with the SEC, including a discussion in the risk factors section of the 2023 annual report on Form 10-K for the period ending December 31, 20
Matthew Selinger: Scribed 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 Christmas products will be successfully completed whether clarissa will be successful in expanding the market for its products and other risks that are described in clear sight public periodic filings.
Matthew Selinger: And with the SEC, including the discussion in the risk factors section of the 'twenty two 'twenty three annual report on Form 10-K. So the period ended December 31 2023.
Matthew Selinger: As accepted 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 Hinds, Clearsign's Chief Financial Officer. So at this point in the call, I would like to turn the call over to CFO Brent Hinds. So Brent, please go ahead.
Matthew Selinger: So as except as required by law clear sign 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 criticized Chief Executive Officer, and Brent height, Chris Nines, Chief Financial Officer.
Brent Hinds: So at this point the call I would like to turn the call over to CFO, Brett Heinz So Brett. Please go ahead.
Brent Hinds: Thank you Matthew.
Brent Hinds: And thank you to everyone joining us here today. Before I begin, I'd like to talk about our most recent news, which was the completion of our capital raise. In short, we successfully raised approximately $9.3 million in gross proceeds through two separate offerings, one, an underwritten public offering, and the second, a concurrent private placement. If we add the net proceeds to our 2023 year-end balance sheet, we would have reported approximately $13.7 million in cash and cash equivalents after this race, and a more detailed description of these offerings is included in our current report on Form 8K filed with the SEC last Friday, April 19.
Brent Hinds: And thank you to everyone joining us here today.
Brent Hinds: Before I begin I'd like to talk about our most recent news, which was the completion of our capital raise.
Brent Hinds: Sure we successfully raised approximately $9 3 million in gross proceeds through two separate offerings. One in underwritten written public offering and the second a concurrent private placement.
Brent Hinds: If we add the net proceeds to our 2023 year end balance sheet, we would have reported approximately $13 $7 million in cash and cash equivalents. After this race and.
Brent Hinds: A more detailed description of these offerings is included in our current report on form 8-K filed with the SEC last Friday April 19.
Brent Hinds: This out of working capital gives us more flexibility as we execute our commercial growth plans and Jim will give more specifics about this and the use of this capital.
Brent Hinds: This added working capital gives us more flexibility as we execute our commercial growth plans, and Jim will give more specifics about this and the use of this capital. Now, I'd like to shift gears and discuss our 2023 year-end financial results. As a reminder, I'd like to point out that our financial results were included in our annual report on Form 10-K, which was filed with the SEC on April 1st. For the fourth quarter of 2023, the company recognized approximately 1.3 million in revenues compared to 50,000 for the same comparable period in 2022. I do want to make a keynote about our fourth quarter 2023 results.
Jim: Now I'd like to shift and discuss our 2023 year end financial results.
Jim: As a reminder, I'd like to point out that our financial results were included in our annual report on Form 10-K, which was filed with the SEC on April one.
Jim: For the fourth quarter of 2023, the company recognized approximately $1 3 million in revenues compared to 50000 for the same comparable period in 2022.
Jim: I do want to make a key note about our fourth quarter 2023 results.
Brent Hinds: We reported a gross profit margin of 43.9%, which was a 12.8% increase compared to our prior year gross margin. This increase was primarily driven by shipments of a process bonus. For our full year 2023 results, our revenues amounted to $2.4 million compared to $374,000 for the same period in 2022. This was a 642% increase over the prior year.
Jim: We reported gross profit margin of 43, 9%.
Jim: Which was 12, 8% increase compared to our prior year gross margin.
Jim: This increase was primarily driven by shipments of our process burner.
Jim: For full year 2023 results, our revenues amounted to $2 4 million compared to 374000 for the same period in 2022.
Jim: This was a 642% increase over the prior year.
Jim: The year over year increase in revenues was driven in large part by our two ongoing.
Brent Hinds: The year-over-year increase in revenues was driven in large part by our two ongoing California refinery process burner projects. Now I'd like to shift focus from revenue to cash. Our net cash used in operations for the quarter ended December 31st, 2023 was approximately 1.5 million, compared to approximately 1 million for the same period in 2022. This $500,000 year-over-year increase was driven by project execution costs.
Jim: California refinery process burner projects.
Jim: Now I'd like to shift focus from revenue to cash.
Jim: Net cash used in operations for the quarter ended December 31, 2023 was approximately $1 5 million.
Compared to approximately 1 million for the same period in 2022.
Jim: There's $500000 year over year increase was driven by project execution costs.
Jim: Now turning our focus for cash to the income statement.
Brent Hinds: Now turning our focus from cash to the income statement. Our net loss for the fourth quarter of 2023 was approximately $1 million, which is a favorable decrease of $300,000 compared to the same period in 2022. The net loss for the full year 2023 was approximately $5.2 million, which is approximately a $500,000 decrease year over year compared to the prior year net loss of $5.8 million. This year-over-year decrease was predominantly due to our overall increase in gross profit and increased sales volume.
Jim: Our net loss for the fourth quarter in 2023 was approximately $1 million, which is a favorable decrease of 300000 compared to the same period in 2022.
Jim: Net loss for the full year 2023 was approximately $5 2 million, which is approximately $500000 decrease year over year compared to the prior year net loss of $5 8 million.
Year over year decrease was predominantly due to our overall increase in gross profit and increased sales volume.
Jim: From a financial perspective, we believe we are much better positioned to scale projects and partnerships.
Brent Hinds: From a financial perspective, we believe we are much better positioned to scale projects and partnerships. Said differently, this capital raise has bolstered our balance sheet. And we believe this will instill greater confidence in our customers and suppliers when doing business with us. And with that, I'd like to turn the call over to our CEO, Jim Deller.
Jim: Said differently. This capital raise has bolstered our balance sheet and we believe this will still greater confidence in our customers and suppliers when doing business with us.
Jim: And with that I'd like to turn the call over to our CEO, Jim Deller Jim.
Colin James Deller: Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on this call today and for your interest in Clearsign. On today's call, as usual, I'll review a business segment, starting with our process burners, followed by boiler burners, and then discuss the outlook for the coming year. I do not have a lot to report regarding our China operations.
Colin James Deller: Thank you Brian for the financial overview.
Colin James Deller: As always I'd like to thank everyone for joining us on this call today and your interest in clear sign.
Colin James Deller: On today's call as usual I'll review, our business segments, starting with our process business.
Colin James Deller: Led by boiler business, and then discuss the outlook for the coming year.
I do not have a lot to report regarding our China operations.
Colin James Deller: We do have some new developments in technology and government validation. In addition to business progress, including both successful start ups and you say it was that we will cover in this call.
Colin James Deller: We do have some new developments in technology and government validation, in addition to business progress, including both successful startups and new sales that we will cover in this call. As Brent discussed earlier, we have also just completed a capital raise. I will discuss this and, particularly, what that means for our business and how that positions Clearsign for the future. But before I start, I want to give a quick update on our open position on our board of directors.
Colin James Deller: As Brian discussed earlier, we have also just completed a capital raise I will discuss this and particularly what that means for our business and how that positions clear sign for the future.
Speaker Change: Before I start I want to give a quick update on our open positions on our board of directors.
Colin James Deller: We do have a highly qualified, independent director identified, and we anticipate completing their engagement in the coming days. As always, we will issue a press release with the details as soon as this is completed. I will now turn to the developments in our process burner line. We have a number of significant developments, some of which are tangible and have resulted in press releases, which I will elaborate on today. Others are more subtle but nonetheless encouraging and are worthy of discussion.
Speaker Change: We do have a highly qualified independent director identified.
Speaker Change: We anticipate completing their engagement in the coming days.
Speaker Change: As always we will issue a press release that details as soon as this is completed.
Speaker Change: I will now turn to the developments in that process been alive.
Speaker Change: We have a number of significant developments some of which are tangible and have resulted in press releases, which I will elaborate on today.
Speaker Change: Oh, there's a more subtle, but nonetheless, encouraging and are worthy of discussion.
Speaker Change: I will start with what may be the most meaningful announcements we've made for our long term business.
Colin James Deller: I will start with what may be the most meaningful announcement we have made for our long-term business. On February 13th, we announced that following a year-long process of assessing operational fired equipment, review and feedback from industry and other stakeholders, and an assessment of economic benefit, California regulators established two new best available control technology or backed thresholds based on the long-term performance and proven NOx emissions of clear sign process furnaces. These two categories were process heaters with a single burner and process heaters with multiple burners.
I'll start with the 13th we announced that following a year long process of assessing operational side equipment.
Speaker Change: And feedback from industry and other stakeholders and the assessment of economic benefit that California regulators established two new best available control technology or banked thresholds based on the long term performance and private Nox emissions a place I'm process Dennis.
Speaker Change: These two categories what process heaters with a single banner.
Speaker Change: Process heaters with multiple bidders.
Colin James Deller: While this designation does not stipulate the technology to be used, it does set the performance levels at which future regulations and permits should be justifiable by both industry and regulators. That being said, the regulators do separately maintain a technology clearinghouse register that lists the technology proven to meet the bank's performance. And as our burners were used to set these new limits, they are automatically included on that register. What is also significant is that there is not a banked program in every state. In fact, there are only two in the USA.
Speaker Change: While this designation does not stipulate that technology to be used it does set the performance levels of which future regulations and permits should be justifiable by both industry and regulators.
Speaker Change: Being said the regulators do separately maintain a technology clearinghouse registered.
It lists the technology proven to meet the bank's performance and as I've been as we used to set these new limits. They are automatically included on that registered.
Speaker Change: What is also significant is that there is not a bank's program every state.
Speaker Change: There are at least two and the USA Cal.
Colin James Deller: California and the Federal EPA. The expectation is that once established in California, the data will roll up to the federal level. So why is this important?
Speaker Change: California, and the federal EPA.
Speaker Change: The expectation is that once established in California, the data will roll up to the federal national level.
So why is this important firstly this assessment was made considering all equipment operational in California.
Colin James Deller: Firstly, this assessment was made considering all the equipment operation in California. So providing the technology that sets what is designated the best performance is a meaningful achievement. Additionally, the assessed equipment has to be operational for the long term to be considered, and the recommendations go through a process of public and industry review and comment, which further validates the reliability of our solutions. And going forward, we believe that this will set a guide for all future regulations, permanent applications, not only in California but also as a reference for other states as they develop and update their NOx regulations.
Speaker Change: Providing the technology that sets, but has designated the best performance is a meaningful achievement.
Speaker Change: Additionally, this test equipment has to be operational long term to be considered.
Speaker Change: And our recommendations go through a process of public and industry review I comment, which further validates the reliability of Escalations.
Speaker Change: Going forward, we believe that this will set a guide for all future regulations permit applications not only in California, but all.
Speaker Change: So a reference for other states as they develop and update that Nox regulations.
Speaker Change: In the near term. This determination is a great validation of our technology in the industry, providing another data point for our prospective customers, who understand the great value uptick abide.
Colin James Deller: In the near term, this determination is a great validation of our technology in the industry, providing another data point for our prospective customers who understand the great value of what we provide but are also looking for comfort and other Operating Reference Units before committing to a technology that is not yet familiar to them or something they are used to. Since you last spoke, we have completed the installation and start-up of our two most significant process heaters to date.
Speaker Change: Also looking for comfort.
Speaker Change: In other operating referenced units before committing to a technology that is not yet familiar to them or something they are used to.
Speaker Change: Since we last spoke we have completed the installation and startup about two most significant process heaters to date.
Colin James Deller: These heaters are side-by-side, one fitted with eight burners, which was completed first, and this was included in our press release on January 17th, announcing the successful third-party performance test for this heater. The second heater, fitted with five burners, was retrofitted late in March and was tested early this month. We are waiting for official third-party confirmation, but our observations of the formal testing give us confidence to believe that our emissions were comfortably below our guarantees.
Speaker Change: These heaters are side by side, one sector with eight business, which has completed first and this was included in our press release on January 17th announcing the successful third party performance test for this season.
Speaker Change: And.
Speaker Change: The second fitted with five business was retrofitted late March and was tested early this month.
Speaker Change: We are waiting for the official third party confirmation, but our observations of the formal testing gives us confidence to believe that our emissions were comfortably below our guarantees.
Speaker Change: We believe these installations are meaningful as references for us.
Colin James Deller: We believe these installations are meaningful as references for us, but also because of the revenue the projects provide. Beyond that, I believe that what we have achieved here will receive attention in our technical custom community. The fuel gas in this application varies from almost zero to 80% hydrogen, and the burners operate throughout that range.
Speaker Change: So the revenue the projects provide.
Speaker Change: Beyond that I believe that what we have achieved here well receive attention in our technical customer community.
Speaker Change: The fuel gas on this application varies from zero to 80% hydrogen and the bonus operate throughout that range in.
Colin James Deller: In addition, the firing is so intense in one of the heaters that it is double the industry recommended level. It is our understanding that this client initially sought a back-end cathodic cleanup system, commonly known as an SCR, due to the technical needs and demands of these heaters. But given the complexity and magnitude of that solution, the client changed its course and selected our Clearsign solution instead.
Speaker Change: In addition, the firing is so intense and one of the heaters that is double the industry recommended level.
Speaker Change: Did I understanding that this client initially saw a back end catalytic cleanup system.
Speaker Change: Many known as an SCR due to the technical needs and demands of these heaters, but given the complexity of magnitude of that solution. The client changed its course selected our <unk> solution instead.
Speaker Change: We believe that by successfully completing these projects we have made a powerful statement to play of Syn <unk>.
Colin James Deller: We believe that by successfully completing these projects, we have made a powerful statement for Clearsign, significant to both our customer base and also the regional air regulators. Well, both of these are valuable additional installations in the field showcasing our technology. Each one of these has a unique story, which we intend to build on as a basis for conference presentations, white papers, etc., to assist recognition of what we can provide in the industry and to support our sales efforts.
Speaker Change: Significant to both our customer base and also the regional air regulators.
Speaker Change: Well both of these are valuable additional installations in the field showcasing our technology. Each one of these has a unique story, which we intend to build on as the basis of conference presentations White papers et cetera to assist recognition of what we can provide in the industry and to support our sales efforts.
Speaker Change: This client was already a repeat customer with clear signs and we anticipate that there will be feature opportunities for us to work together on this site.
Colin James Deller: This client was already a repeat customer of Clearsigns, and we anticipate that there will be future opportunities for us to work together on this site. The other 20-burner California project is also progressing, but on a less tight timeframe. As we previously stated, the final witness testing went as planned.
Speaker Change: The other 20, then at California project is also progressing well.
Speaker Change: <unk> type time frame.
Speaker Change: As we previously stated the final witness testing went as planned.
Colin James Deller: These burners are now being fabricated by our partners ECO and are scheduled to be shipped to our client in the Los Angeles area of California late in the third quarter this year. When up and running, there will be another two eases, this time with 8 and 12 burners, which will provide a very significant reference for us, especially given their location in the large refining hub in the LA area. At this time, we do not have the exact date of the site shutdown during which these burns will be installed, but that client has indicated early 2025. It should be noted that there are a lot of activities included in these refinery shutdowns, so the planning process is complex and dependent on many factors.
And as of now being fabricated by our partners and are scheduled to be shipped to a client in Los Angeles, California late in the third quarter. This year.
Speaker Change: Whenever I'm running this will be another two heaters. This time with eight and 12 vendors, which provide a very significant reference for us.
Speaker Change: Especially given their location and the large refining hub and the L. A area.
Speaker Change: At this time, we did not have the exact date of the site shutdown during which these beds will be installed by client as indicated early 2025.
Speaker Change: Bear in mind that there are a lot of activities included in these refinery shutdowns. So that planning process is complex and dependent on many factors.
Speaker Change: We won't be able to invoice and receive payment and recognize revenue upon the delivery of the bad news and that would be a small portion of our right to purchase all of them will remain until installation.
Colin James Deller: We will be able to invoice and receive payment and recognized revenue upon the delivery of the burners, and only a small portion of the related purchase order will remain until installation. As we have said in the past, we very much believe that a lot of the industry is watching these larger multi-burner orders. We believe that the effect of being able to reference the very recent start-up of the two heaters at the California refiner has been significant and has resulted in a marked change in attitude and response when talking to customers.
Speaker Change: As we have said in the past we very much believe a lot of the industry is watching these larger multi burner orders.
Speaker Change: We believe that the effect of being able to reference the very recent startup of the two heaters at the California refining has been significant and has resulted in a marked change in attitude and response when talking to customers.
Colin James Deller: To give some color, in the past few months, we have had two global refiners taking it upon themselves to contact the engineering companies working on projects for them and asking them to make sure that they include Clearsign in their evaluations. We have also had a global hydrogen producer reach out to us directly to preemptively start the process of adding Clearsign to their approved vendors list. Our Department of Energy-funded hydrogen project is progressing. We have the first burner fabricated and installed for testing. This is not expected to be the final production version.
Speaker Change: Color in the past few months, we have had to global refiners, taking upon themselves to contact the engineering companies working on projects for them and asking them to make sure that they include clear signed in their evaluations.
We have also had a global Hudson produce a reach out to us directly to preemptively start the process of adding <unk> to their pre vendors list.
Speaker Change: Our department of energy funded Hodgkin project is progressing.
Speaker Change: We have the first batter fabricated and installed the testing.
Speaker Change: This is not expected to be the final production version. There is a lot of your best described at the first physical draft, what we expect to be the production version.
Colin James Deller: It is likely best described as the first physical draft of what we expect to be the production version. Nonetheless, it is good to see all the design and engineering work put into this project manifest in a physical product. We're excited to see how it performs in the test furnace. I look forward to providing updates as this project continues.
Speaker Change: Nonetheless, it is good see all the design and engineering work put into this project manifest into a physical product.
Speaker Change: We're excited to see how it performs in the test furnace.
Speaker Change: I look forward to providing updates as this project continues.
Colin James Deller: It is also encouraging that we are already receiving inquiries about when this burner will be ready, in addition to expressions of interest from customers looking for solutions and wanting to discuss opportunities to be one of our first demonstration sites for these hydrogen burners. Before moving on to our boiler product line, I want to talk about a new development that has gained significant traction in the past few months. The reason for talking about it now is that it is a hybrid of our process burner and boiler technologies and markets that I believe is developing into a whole new business segment.
Speaker Change: Also encouraging that we are already receiving inquiries about when this has been and will be ready. In addition to expressions of interest from customers looking for solutions I wanted to discuss opportunities to be one of our first demonstration sites for these hydrogen banners.
Speaker Change: Before moving onto our broader product line I wanted to talk about a new development that has gained significant traction in the past few months.
Speaker Change: The reason for talking about it now is that it is a hybrid of our process burner boiler technologies and markets that I believe is developing into a whole new business segment.
Previously, we announced the sale of a burn Angela chemicals manufacturer in the Gulf Coast of Texas and at this point and it wasn't application tangential to our boiler burner product line and the heater was a horizontal <unk>. He's a bill by either company Tulsa heaters base here in Tulsa.
Colin James Deller: Previously, we announced the sale of a burner to a chemicals manufacturer in the Gulf Coast of Texas and that this burner was an application tangential to our boiler burner product line and the heater was a horizontally fired heater built by heater company Tulsa Heaters based here in Tulsa. This application has opened up a range of new opportunities for us requiring low NOx and horizontally fired applications of a similar nature, including inquiries from a global oil company and another from a major energy infrastructure company.
This application has opened up a range of new opportunities for us requiring low Nox and pause I'll be fine applications of a similar nature.
Speaker Change: Including inquiries from a global oil company and another from a major energy infrastructure company.
Speaker Change: We are also discussing developing a standard offering with Tulsa, He just midstream of.
Colin James Deller: We're also discussing developing a standard offering with Tolsa Edis midstream of their low NOx client needs. For Tulsa Heaters Ministry, this project provides a strategic advantage, enabling them to offer a best-in-class low-knots heater that doesn't require an SER system at a lower selling price and lower operating costs for their customers. To add a datapoint to this development, Tortilla Midstream is hosting a customer seminar in the coming weeks, and I've been asked to include Clearsign Burners as part of their presentation to their customers, a request we are, of course, happy to support.
Speaker Change: They're low Nox client needs.
So Tulsa its midstream dispute Jason to provide a strategic advantage, enabling them to offer a best in class low marks he said that doesn't require an SCR system.
Speaker Change: And a lower selling price and lower operating costs for their customers.
Speaker Change: To add a data point this development towards either midstream is hosting a customer seminar in the coming weeks.
Speaker Change: And have asked to include place I'm, Ben as part of their presentation to their customers.
Speaker Change: Requests we are of course happy to support.
Speaker Change: A significant component of this development has been a recent investments we have made in house capabilities.
Colin James Deller: A significant component of this development has been a recent investment we have made in-house capabilities. Back in November, we announced the hiring of Matthew Martin as our Chief Technology Officer, and we discussed his background and expertise in our last call. One of his many credentials is that he is a world-class practitioner of a very sophisticated computer modeling technology that allows us to predict the structure, flame patterns, heat transfer, and chemistry of flames and the heaters or boilers in which they are positioned.
Speaker Change: Back in November we announced the hiring of Matthew Martin as our Chief Technology Officer, who will discuss his background and expertise in our last call.
Speaker Change: One of his many credentials he is a world class practitioner of a very sophisticated computer modeling technology that allows us to predict the structure flame patents heat transfer and chemistry planes and heaters boilers at which they are positioned.
Speaker Change: We haven't invested in this capability and this has allowed us to not only meet the immediate requirements of this new application for us, but the vet the roadmap to develop the next generation of hauls amplifies clear sign vendors.
Colin James Deller: We have now invested in this capability, and this has allowed us to not only meet the immediate requirements of this new application for us but to develop the roadmap to develop the next generation of horizontally fired clear sign burners. I cannot go into technical details here.
Speaker Change: I cannot go into technical details here, we will not be in a position to publicize details in the short term, while we are still ensuring our new intellectual property is protected.
Colin James Deller: We will not be in a position to publicise details in the short term while we are still ensuring that new intellectual property is protected. However, I do believe that this will be significant for this new market and will also have implications for our boiler burner market. Turning to our boiler burner product line, we are happy to report that our first permanent installation in California continues to run well, and we have been using these as demonstration sites that respective customers can visit while looking to purchase.
Speaker Change: I do believe that this will be significant for this new market I would also have implications for our boiler burner markets.
Speaker Change: Turning to all of it on a product line. We are happy to report that our first permanent installation in California continues to run well and we have been using these as demonstration sites prospective customers can visit.
Speaker Change: Looking to purchase.
Speaker Change: In terms of order flow. We are also able to announce back from February 20, <unk>, our first multi unit commitment for a boiler burner product line.
Colin James Deller: In terms of order flow, we're also able to announce that on February 21st, our first multi-unit commitment for our boiler burner product line. This order is from a fruit and vegetable multijuice processing company located in the California Central Valley.
Speaker Change: This order is from a fruit and vegetable multi juice processing company located in California Central Valley.
Speaker Change: Our partner, California boiler.
Speaker Change: Initially received a letter of intent for the purchase of 475 horsepower boilers, including clear sign KOL broke then is followed.
Colin James Deller: Our partner, California Boiler, initially received a letter of intent for the purchase of four 475 horsepower boilers, including Clearsign Core or Rogue burners, followed by the first purchase order in the series of four new boilers. The additional burner orders will be issued concurrent with the construction of additional plants through processing lines of the customer. There are also a number of other proposals issued and in discussion. We will, of course, let you know as we get these over the line.
Followed by the first purchase order in the series of four boilers.
Speaker Change: The additional been orders will be issued concurrent with the construction of additional plant fruit processing lines of the customer.
Speaker Change: There are also a number of other proposals issued any discussion we will of course, let you know as we get these aligned.
Speaker Change: We have a large 200 horsepower scheduled to install in startup around midyear on the size of the California recycling business.
Speaker Change: This burn was sold in February 2023 was shipped to California in September that year.
Colin James Deller: We have a large 1200 horsepower burner scheduled to install and start up around mid-year on the side of a California recycling business. This burner was sold in February 2023 and was shipped to California in September that year and has been awaiting installation since then. This boiler is large and falls in the range requiring 2.5, half a million knocks.
Speaker Change: Has it been awaiting installation since then.
Speaker Change: This boy there is large unfolds in the range requiring two five parts per million Nox.
Speaker Change: As projects being held up in the construction permitting process, which we believe is now resolved.
Speaker Change: The site will provide a very significant presence for us went up I'm running a business. So this will be the first customer site running under $2 5 million Nox guarantee.
Colin James Deller: This project has been held up in the construction permitting process, which we believe is now resolved. The site will provide a very significant reference for us when it is up and running because this will be the first customer site running under a 2.5 million NOx guarantee. This burner is branded as NZN or near zero NOx and truly sets Clearsign apart in the mid to large California boiler markets. We are very much looking forward to getting this burner in operation. As said at the start of this call, on April 19th, we announced and filed details of our recently completed capital raise.
Speaker Change: This is a buying a branded as ANZ at or near zero, Nox and truly sets clear sign of pumps in the mid to large, California boiler market.
Speaker Change: Very much looking forward to getting this better.
Speaker Change: In operation.
Speaker Change: I said at the start of this call on April 19th we announced on final details of our recently completed capital raise.
Speaker Change: With the recent process burner projects in production and also now in operation and with a boiler burner product line now also gaining the much needed reference sites. We believe we are at a point our products will be more readily accepted and sold in the market.
Colin James Deller: With the recent Process Burner projects in production and also now in operation, and with our Boiler Burner product line now also gaining the much-needed reference sites, we believe we are at a point where products will be more readily accepted and sought in the markets. Over the last five years, we have developed our burner technology to offer product platforms that are standardised and products that install and operate like the burners our customers are used to, with the exception that we deliver NOx numbers that allow our customers to avoid having to install very expensive and complex catalytic systems to remove NOx emissions from their boilers and heaters.
Speaker Change: Over the last five years, we have developed tap and the technology to also product platforms that are standardized and products that install and operate <unk> as our customers are used to with the exception that we deliver nox numbers that allow our customers to avoid having to install very expensive and complex catalytic systems to remove nox emissions from.
Speaker Change: Boilers and heaters.
Speaker Change: We have also formed partnerships with leading global and national equipment manufacturers, which allow our projects we fulfilled for the resources and credentials of these well established industry stalwarts.
Speaker Change: And Mark has also developed think we.
Speaker Change: We have seen new regulations issued in California.
Speaker Change: I expect that Texas, Colorado, Salt Lake City, all leaving in the same direction and.
Speaker Change: And that technology is also being recognized in de facto endorsed by the Vaca <unk> in California under their backed review process.
Colin James Deller: We have also formed partnerships with leading global and national equipment manufacturers which allow our projects to be fulfilled with the resources and credentials of these well-established industry stalwarts, and Marcus is also developing. We have seen new regulations issued in California and expect that Texas, Colorado, and Salt Lake City are moving in that same direction.
Speaker Change: We have always done we believe our final hurdle to sales will be overcoming the perception of being new to the market.
Speaker Change: We anticipate that getting these new installations up and running will be fundamental to overcoming this remaining impediment and accelerating sales and close on its development as a business.
Speaker Change: Our estimate of the run rate to breakeven is just 160 <unk> per year.
Colin James Deller: That technology has also been recognized and de facto endorsed by the regulators in California under their backed review process. With all this done, we believe the final hurdle to sales will be overcoming the perception of being new to the market. We anticipate that getting these new installations up and running will be fundamental to overcoming this remaining impediment and accelerating our sales and Clearsign's development as a business. However, our estimate of the run rate to break even is just 160 burners per year. Bear in mind that the two heaters we have just started up in California include 13 burners, and the order we have in production for the LA area includes 20 burners.
Speaker Change: Bear in mind.
<unk> as we have just started up in California included 13 vendors and the or do we have any production of the L. A area includes 20 business.
Speaker Change: We do not believe that this is an extraordinary number and given the developments I've just summarized we believe that the path to get there is tangible.
Speaker Change: Simply put the money, we raised for strategic and based on our estimate of the amount that we believe will be required to get us to that critical point of cash flow breakeven.
In closing there are a number of significant items participates in the near term.
The formal third party emissions testing. The second recently started a pizza is expected to be impactful in the industry due to the extreme technical complexity of the operation.
Colin James Deller: We do not believe that this is an extraordinary number, and given the development I've just summarised, we believe that the path to get there is tangible. Simply put, the money we raised was strategic, and based on our estimate of the amount that we believe will be required to get us to that critical point of cash flow breakeven. In closing, there are a number of significant items to anticipate in the near term.
Speaker Change: We will issue a press release with its performance is officially consent.
Speaker Change: The performance of both of these heaters will provide data for other case studies and industry presentations.
Speaker Change: These will also be available on our website as they are published.
Speaker Change: This will be the same for a large boiler burner expected startup around midyear.
Speaker Change: We have the hydrogen Bennett just starting the initial phase of physical testing.
Colin James Deller: The formal third-party emissions testing, the second recently started up heater, is expected to be impactful in the industry due to the extreme technical complexity of that operation, and we will issue a press release when this performance is officially confirmed. The performers of both of these heaters will provide data for other case studies and industry presentations. These will also be available on our website as they are published. This will be the same for our large boiler burner, expected to start up around mid-year.
Speaker Change: I appreciate that the computer modeling capability, we have recently invested in <unk>.
Speaker Change: The acceleration of the development of our technology that enables in conjunction with the addition of people like Matthew Martina, New CTO and less tangible looking in from the outside.
But from my perspective, and considering the long term potential of clear sign.
Speaker Change: I believe this will be a significant lever in the growth of our business.
Colin James Deller: We have the hydrogen burner just starting the initial phase of physical testing. I appreciate that the computer modeling capability we have recently invested in and the acceleration of the development of our technology that that enables, in conjunction with the addition of people like Matthew Martin, our new CTO, are less tangible when viewed from the outside. But from my perspective and considering the long-term potential of Clearsign, I believe this will be a significant lever in the growth of our business.
Speaker Change: I want to acknowledge and thank our California refining customers.
Speaker Change: The installation we have just completed a two heaters that are critical to the operation of their refinery.
Speaker Change: The engineering and project teams at both the refinery and clear sign deserve recognition.
Speaker Change: The second and replacement projects.
Speaker Change: Originally selected.
Speaker Change: Should Nox control system.
Colin James Deller: I want to acknowledge and thank a California refining customer. The installation we have just completed are two heaters that are critical to the operation of their refinery. The engineering and project teams at both the refinery and Clearsign deserve recognition; to step in and replace a project originally selected for fatality reduction and oxygen control system and produce the results that we have requires significant effort and dedication. Throughout the project, and especially during the startup and handover of the new equipment to the plant operations team,
Speaker Change: And produce the results that we have required significant efforts.
Dedication.
Speaker Change: Throughout the project and especially through the startup and handover open new equipment to the plant operations team.
Speaker Change: Ultimately it is all of our sales revenue and profit.
The orders we are executing are generating revenue and our profit margins, we anticipated and our success is being noticed by our customers.
Speaker Change: As I mentioned earlier, we have a heater manufacturers working with us to provide a future offering for their low Nox applications. We have quotations being provided to engineering companies that were initiated at the request of the global refining and uses our new business segments developing from recent equipment startups.
Colin James Deller: Ultimately, it is all about sales, revenue, and profit. The orders we are executing are generating revenue and the profit margins we anticipated, and our successes are being noted by our customers. As I mentioned earlier, we have a heater manufacturer working with us to provide a future offering for their low NOx applications. We have quotations being provided to engineering companies that were initiated at the request of global refining end users, and new business segments developing from recent equipment startup companies.
Speaker Change: And finally, we also have other factor validation.
Speaker Change: California Banks program that we anticipate will impact inquiries and sales opportunities in the future.
Speaker Change: With that I'd like to open up the call for questions.
Colin James Deller: And finally, we also have a de facto validation for the California Backed Program that we anticipate will impact inquiries and sales opportunities in the future. With that, I'd like to open up the call for questions. Please operate it.
Speaker Change: Please operator.
Speaker Change: We will now begin the question and answer session.
Speaker Change: The question you May Press Star then one on your Touchtone phone. If you are using a speaker following please pickup your handset before pressing Nicky.
Operator: 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 were using a speakerphone, please pick up your handset before pressing the To withdraw your question, please press star, then number two. At this time, we will pause momentarily to assemble our equipment. Our first question comes from the line of Amit Dayal. When right, your line is open. Thank you. Good afternoon, everyone. So Jim, you know, you gave us some color on
Speaker Change: Let me draw. Your question. Please press Star then number two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yes.
Speaker Change: Our first question comes from the line of Amit Dayal Wainwright. Your line is open.
Thank you and good afternoon, everyone.
Speaker Change: So Jim you gave some color on some.
Speaker Change: Items that are in the pipeline.
Amit Dayal: On a dollar amount perspective, how much would that translate into.
Amit Dayal: Thank you. Good afternoon, everyone. Jim, you gave some color on some of the items that are in the pipeline. From a dollar amount perspective, how much would that translate into? I guess if there's a backlog number you could share or maybe some color on, you know, how big the pipeline is, as of now.
Speaker Change: I guess, if theres a backlog number you could share or maybe some color on how big the pipeline is.
Speaker Change: As of now.
Speaker Change: Hi, good afternoon.
Speaker Change: Good to hear from you.
Speaker Change: Thanks for your question.
Speaker Change: Yeah.
What we need to be careful when putting a.
Colin James Deller: I think we need to be careful when actually putting a, you know, a strict dollar figure on... a pipeline. But because things do move around, but there's some significant developments I think are worthy of note. We referenced in the call that there are end user customers, these are global refiners that are requesting Clearsign to be included in the evaluation of projects that they have placed with engineering companies working for them. So this is the end users basically pulling Clearsign into their projects for assessment. I can't, you know, I can't put dollar figures on that. I don't think it's appropriate.
Speaker Change: Dollar figure too.
Speaker Change: A.
Speaker Change: Our pipeline.
Speaker Change: But because things do move around but theres some significant.
Speaker Change: Developments I think are worthy of note.
We referenced in the call, but they're all end user customers needs of global refiners, but all requesting liaison to be included in the evaluation of projects that they have placed with engineering companies working for them. So this is the end users.
Speaker Change: Holly.
Speaker Change: Assigned into their projects for assessment.
Speaker Change: Tom.
But the other thing is on.
Speaker Change: I think it is appropriate but one of those is in the order of the large order that went into the L. A area.
Colin James Deller: But one of those is in the order of the large order that went into the LA area. Now there's, you know, for everyone, an inquiry is not a guarantee of a sale, but it is..., and an expression of interest is included in the sales pipeline. But what's significant is that, for the first time, we actually have the end users, making the request and going to their engineering companies and asking them to come to Clearsign to make sure that we're included. Up until now, it has always been us pushing our technology out.
Exelon.
Speaker Change: An inquiry is not a guarantee of a sale, but it is a.
Speaker Change: An expression of interest.
Speaker Change: It is included in the sales pipeline, but not significant.
Speaker Change: Is that we think for the first time as a clear sign we actually have the end users, making the requests and go into their engineering companies and asking them to come to play assigned to make sure. The way included up until now it has always been pushing out technology out.
Colin James Deller: So those are, you know, in my mind, very significant for our pipeline. [inaudible] But the other comment I made that is also worthy of note is the hydrogen producer coming to Clearsign and taking it on themselves to request that we go through the process to be evaluated for inclusion on their approved vendor list. It is significant for the same reason. Again, this is a global customer, a very technical customer in the field, now coming to Clearsign to make sure that we're available to them to use, as a supplier, for their needs.
Speaker Change: So those all in my mind very significant drop.
Speaker Change: Pipeline.
Speaker Change: The.
Speaker Change: The other comment I made.
Speaker Change: It also worthy of note.
Speaker Change: Hygiene producers coming to clear sign.
And taken all of them so with request that we go through the process to be evaluated.
Speaker Change: For inclusion in their approved vendor list.
Speaker Change: It's significant.
Speaker Change: <unk> raised and again this is a global customer that very technical customer in the field.
Speaker Change: Now coming to play assign that to make sure that were available to them to use.
Speaker Change: A supplier.
Speaker Change: Two of them for their needs.
Speaker Change: So from a different way.
Colin James Deller: So from where we are, we've got a lot of general interest, but those are the big changes to me, and they are shifts back in 2019. When we set out on this path of commercialization and laid out a plan, there were some milestones we identified to get to the point that we have. The end user customers are pulling for and asking for equipment to be included, and engineering companies are recommending our equipment. Those were key milestones to identify then. So to finally get to that point now, I think it speaks volumes for the developments here at Clearsign. No, understood. Thank you, Jim, for that.
Speaker Change: We got a lot of general interest, but those are the big changes to me and they all have shifts back in 2019, when we set out on this path of commercialization and laid out a plan. There was some milestones we identified and getting to the point that we have.
Speaker Change: The end user customers pulling in.
Speaker Change: Asking for equipment to be included as the engineering companies recommending our equipment.
Speaker Change: Those are all key milestones you've identified them.
Speaker Change: Finally get get to that point now.
Speaker Change: I think it speaks volume for the developments here closely.
Speaker Change: No I understood. Thank you Jim for that.
Amit Dayal: No, understood. Thank you, Jim, for that.
Speaker Change: So in that context right.
Amit Dayal: So in that context, right, you know, looks like interest is building, you have the backing validation as well. You've completed this financing. So is part of the financing going to go towards, you know, just building a sales team internally? I know you have channel partners, but how are you sort of, you know, taking a little bit more control of the sales process, you know, with all of these developments?
Speaker Change: It looks like interest is building you have.
Back validation as well.
Speaker Change: You've completed this financing.
Speaker Change: So.
Speaker Change: Is part of the financing going to go towards.
Speaker Change: <unk> is building a sales team in Germany, I know you have with channel partners.
Speaker Change: And how are you sort of taken a little bit more control of the sales process.
Speaker Change: With all of these developments.
Okay.
Colin James Deller: We are developing our sales capability just with our business structure, that is, it's not only an internal function, but it's also through partnerships and outsourcing. We're getting to the point that our technology is being recognized in the industry. From a sales perspective, right, they're all A very effective way of making sales in the industry, especially for smaller companies, is to engage with third parties. Call them consultants, sometimes sales agents, but third parties that may carry a number of products. They're talking to the end users and customers all the time and are very familiar with the projects in the area. Of course, until now.
Speaker Change: We are developing our sales capability just with Ah.
Speaker Change: A physical structure that is but it's not only internal bunch of this also through partnerships and outsourcing.
Speaker Change: We're getting to the point that our technology is being recognized in the industry.
Speaker Change: From a sales perspective, but.
Speaker Change: They're all.
Speaker Change: That's very effective way of making sales in the industry, especially for small companies is to engage with third party called the consultant, sometimes <unk> third parties that may carry a represent a number of products.
Speaker Change: They're talking to the end user customers all of the timing very familiar with the projects in the area.
Speaker Change: Up until now.
Speaker Change: It has been.
Colin James Deller: It has been, but a good company, Clearsign has been a company that's not been appealing to them because we were not well known in the industry. And from their perspective, we'd be a hard technology to sell. We're now in the process; we've got interest from those third parties. So just as an example of what this development does is allow us to expand our sales team, but do that efficiently through leveraging these third-party companies and engaging with them, to write, benefit from their contacts and their personal relationships with the customers. So it's having the technology developed but also being able to engage others. Now, in addition to the developments in house that we're making, I think all really bolstering our sales capabilities overall on a Holistic Level.
Speaker Change: A.
Speaker Change: Got it.
Speaker Change: Please lines being accomplished has not been appealing to them because we were not well known to the industry in that space. It will be a hollow technology to sell well.
Speaker Change: Now in the process, we've got interest from those third parties. So just as an example, it's development does is allowing us to expand our sales team, let's do that efficiently through leveraging these third party companies and engaging with them.
Speaker Change: Two.
Speaker Change: Alright.
And it takes some there Tom thanks, and personal relationships with the customer so it's.
Speaker Change: I'm Gonna technology developed but also being able to engage others.
Speaker Change: In addition to the developments.
Speaker Change: In house that we're making I think Paul when.
Speaker Change: When he bolstering up our sales capabilities our goal.
Speaker Change: Holistic level.
Understood: Understood. Thank you Jim just one last one.
Amit Dayal: Thank you, Jim. Just one last one. No, so for the four quarters of twenty four, how should we think about sales, you know, sort of ramping up? I'm sure there's going to be some lumpiness, as you make deliveries, etc. But, you know, are you expecting revenues to just be, you know, sort of a little unevenly throughout the year? How should we think about sort of the cadence of revenues?
Speaker Change: For the full quarter was 24.
How should we think about sales sort of ramping I'm sure there's going to be some lumpiness.
Speaker Change: As you make deliveries et cetera.
Speaker Change: No.
Speaker Change: Are you expecting you know.
Speaker Change: Revenues from just be.
Speaker Change: Distributed.
Speaker Change: Give us a little a little unevenly throughout the year, how should we think about sort of the cadence of revenues this year.
Speaker Change: Okay.
Speaker Change: So at a practical level I think that's really what Las Vegas, but we don't want to start Mike It forced us but the revenue was a result of.
Colin James Deller: So at a practical level, I think that's really what's meaningful. We're not what we don't want to start making forecasts about, but the revenue as a result of work as a result of products being shipped and meeting the obligations of those projects. We've reached, but we've, Shipton started up the burners in the California refinery, but we announced the successful start of improving the emissions of one of those heaters that was installed, was shipped late last year and started up in January.
Speaker Change: Alright.
Speaker Change: As all of our products being shipped to meeting the obligations of those projects.
Speaker Change: We.
Speaker Change: Hi, Brian.
Speaker Change: Alright.
Speaker Change: Shipped and started off the burden is on in the California refineries, but we announced the successful startup. We previously emissions are one of those heaters that was installed.
While ship late last year and started up in January we've recently shipped a bonus for the second pizza.
Colin James Deller: We recently shipped a furnace for the second heater and started that up. Shift in March started up in just the last few weeks. That was very successful; waiting on the formal documents confirming the third-party assessment of that. But those...
Speaker Change: <unk> started that up.
Shipped in March started up in just the last few weeks that was very successful waiting on the formal.
Speaker Change: Documents concerning the third party assessment of that but those.
Colin James Deller: Product Shipping will drive revenue. And then we have the other large order I mentioned, which is being fabricated this time to ship out to California. Shipping those burners is going to be a key milestone for us, along with some boiler burner projects, but those are going to be the major events that are in process at this time. But as you say, it's at this time with the number of orders that we have and especially some of them being very large orders with very significant milestones, it is going to create some lumpiness.
Speaker Change: Product shipping will drive revenue.
Speaker Change: Although we have the other large order that I mentioned is being fabricated at this time to ship to California shipping those buses is going to be a key milestone.
Speaker Change: For us along along with some awesome bought a bunch of projects, but those are going to be.
Speaker Change: The major events that are in process at this time, but as you're saying it's at this time with a number of orders that we have.
Speaker Change: Especially if some of them being very large orders with very significant milestones.
Speaker Change: It is going to create some lumpiness.
Speaker Change: Honestly.
Amit Dayal: But that's all I have, Jim. I'll take my other questions offline. Thank you.
Speaker Change: That's all I have Jim I'll take my questions offline. Thank you.
Colin James Deller: Great. Thank you, Amit. It's good to talk to you.
Speaker Change: Alright, Thank you, let's get started.
Speaker Change: There are no more questions at this time I would like to turn the call back over to Jim Deller Ofer.
Operator: There are no more questions at this time. I would like to turn the call back over to Gene Deller, Clearsign CEO, for any closing remarks.
Oh for any closing remarks.
Colin James Deller: Well. Thank you everyone carry interest and taking the time to participate today.
Colin James Deller: Well, thank you 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. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: We look forward to updating you regarding our developments on speaking with you on our next call.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Unknown Attendee: and Unknown Attendee.
Speaker Change: Yeah.