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Good day, everyone, and welcome to the ClearSign Technologies First Quarter 2026 Earnings Conference Call. It is now my pleasure to hand the floor over to your host, Matthew Selinger, Investor Relations at ClearSign Technologies. Sir, the floor is yours.
Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation First Quarter 2026 Corporate Update 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. 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 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 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 filings with the SEC, including those discussed under the Risk Factors section of the annual report on Form 10-K for the period ended December 31, 2025. Except 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. So with me on the call today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So with that, I'm going to turn the call over to Jim.
Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and for your continued interest in ClearSign. Like our more recent quarterly calls, we will use a Q&A format for this session. Some of you have sent in questions ahead of time, and we did assimilate those questions into the materials that we will cover today. So the call today, Matthew will lead a Q&A session where we will go through the different business units, much like our previous calls. If you wish, you can send in questions to our Investor Relations at mselinger@firmirgroup.com. So to start us off today, I'm going to hand over to Brent Hinds, who will go over the financial numbers for the first quarter of 2026.
Thank you, Jim, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-Q were filed last week with the SEC. With that, I'd like to give an overview of our financial results for the first quarter of 2026. For the first quarter of 2026, the company recognized approximately $200,000 in revenues compared to approximately $400,000 for the same period in 2025. This year-over-year decrease in revenues was predominantly driven by a decrease in spare part deliveries during the first quarter this year. Our gross profit for the quarter decreased compared to the same period in 2025. This decrease was mainly due to lower revenues and a warranty accrual of $410,000 made in anticipation of potential modifications to some installed equipment in a California refinery. As a result, the year-over-year decrease in gross profit was approximately $589,000. Our net loss for the first quarter increased by $114,000 compared to the same period in 2025. The impact from the gross profit on our net loss was offset by a $369,000 decrease in general and administrative expenses. Our G&A expenses decreased in comparison to 2025, in large part due to reduced legal fees that were incurred during 2025 for a special committee of our Board of Directors that was decommissioned after our 2025 stockholder meeting. Now let's shift focus to cash. Our net cash used in operations for the first quarter of 2026 was approximately $1.3 million compared to approximately $1.1 million for the same period in 2025. This year-over-year change was predominantly driven by a reduction in our current liabilities. As of March 31, 2026, we had approximately $7.7 million in cash and cash equivalents with approximately 5.4 million shares of common stock outstanding. And with that, I'd like to turn the call over to our CEO, Jim Deller. Jim?
Thank you, Brent. And again, thank you, everyone, for joining us today. I'm actually going to hand over to Matthew Selinger, who's going to lead the question-and-answer session. But just a reminder, as we go through this, if you do have questions, you can send those into mselinger@firmirgroup.com. So with that, Matthew, I'll hand it over to you.
Great. Jim, Brent, thanks for joining me here today. We did have a call a few weeks ago; however, we have been busy between now and then, and we do have some significant events and developments to discuss. So with that, let's dive right in. Jim, just last week, we announced an order for the next phase of a 32-Burner Project for a California refinery. So can we dive into this and talk about what we mean by the next phase of this order?
Yes. I think it's good, especially for investors new to ClearSign. We were given the start of actually two orders late in 2025: one for 4–6 burners going to a Texas refinery and one for 32 burners destined for a refinery in California. As is common with our projects, these are released in phases. The first phase was for initial engineering and computational modeling, where we basically simulate the burners, their effects, flow and performance on a computer modeling system. That phase is now complete for the California order. The next phase of the project is for us to do the detailed engineering and fabricate the first article of those burners. We will then install that and demonstrate it. We will make any optimizations necessary and then show it performing in a full-scale test furnace at the Zeeco facility.
Okay. And Jim, this is the ClearSign Core Gen 2 technology?
Yes, in a modified form. What's actually interesting about this order is the burner that was developed — the round burner developed as part of the SBIR program — was our standard shape. But what we developed was a configurable architecture that we could adapt to flat planes or different burner shapes or formats to fit into the variety of different heaters you find in a refinery rather than being restricted to heaters that needed a round burner. This particular order is for a heater that needs a long thin burner that fires up against a wall to make this heater work. That's just the type of heater that this is.
And in the press release we referred to this as a flat flame application. So the ClearSign Core Gen 2 is really a burner platform, and you referred to it as having a configurable architecture. Is that correct?
Yes, that's a good description. The way the burner works is a series of components that creates the flow field that controls the NOx and allows the burner to operate the way it does. We can arrange those components to control the flame shape and the shape of the burner depending on the needs of the client. So it's a very flexible technology that gives us the ability to adapt it to different types of heaters and processes in refineries and chemical plants wherever they're needed.
Okay. So let's move back to the discussion of the order. Can you quantify what this might mean in terms of dollars?
I can. There's more engineering in this particular project because it is a very technical heater and it's also the first flat configuration of this type we've done. So the engineering and testing portion is just shy of $0.5 million for this part of the order we received.
Okay. So can we break down a typical process burner order by phases and potential dollars?
I think it's useful to talk of a hypothetical project. The orders we started at the end of last year included one for 36 burners to Texas and one for 32 to California. Let's take a hypothetical 30-burner order. We've given guidance for an average price of a process burner at about $100,000. So for a 30-burner order, the equipment would be about $3 million. On top of that, there is typically about $300,000 in engineering, computer modeling and testing that goes into the initial phase as we dial the burner details in. Typically about $150,000 would be the initial engineering and modeling the burners on the computational platform, showing the customer how they work and what to expect. The next phase is typically about $250,000; about $100,000 of that will be the first burner because that phase includes putting the first production article into the test furnace and demonstrating it to the customer. That's their chance to see it firing for real, put the burner through its paces, check the emissions and the operation, and make sure it does everything they need. After completion of that phase, we would be released for the fabrication orders. So in a 30-burner order, we'd manufacture one for the test, then be released to manufacture the other 29 and refurbish the one used for testing.
And that last phase, which is the bulk of the equipment order, what are the payment terms? We tend to get 50% upfront, is that right?
Yes. We often get stage payments; they can vary. A good approximation is 50% upfront at the point of release. Our process burners are fabricated by Zeeco. They purchase materials and start work, and then we receive the other 50% of the payment when the product is created and ready to be collected from the Zeeco facility.
Okay. So Brent, I'll turn to you. These projects are basically self-funding. Is that right?
Yes, that's correct. Before we recognize revenue, we typically receive cash from the customer to augment the costs that we incur. From my perspective, the key point is we're typically able to collect cash ahead of our expenditures on a project. So especially for projects in the $3-plus million range, we don't have to dig into our cash reserves to execute those projects. We get cash in from the customer ahead of our cash going out to execute the projects. They're essentially self-funding through the project.
Fantastic. Let's move then into the other large project you mentioned, the 36-burner order. This one differs from the 32 and from what we previously announced. Could you describe what's going on here?
From a technical perspective, our burner technology offers two main benefits. First, it helps customers meet new aggressive emissions regulations at a much lower cost than incumbent technologies such as selective catalytic reduction (SCR). Second, because our burner technology allows us to structure and shape flames, we can control how they interact and transfer heat to the client's heater. That means we can make heaters operate better, reduce maintenance requirements, or in some cases increase throughput. On projects like this, we can offer clients a very positive return on investment. The 36-burner order going to Texas is driven by increased performance of that client's heater, in addition to emissions limits. The configuration of the burners in this case is different: think of the heater as a series of square boxes pushed up against each other, with our burners firing horizontally through opposing sidewalls toward each other. This is another adaptation of the burner technology to fit a specific need, with the objective of increased heater performance as well as NOx control.
So is this getting us into a larger market and larger heaters? How is that working for you?
It's a bit of both. Being able to serve heaters that use flat flames opens up new processes. For example, delayed coking units in refineries often use flat flame burners. Completing the SBIR program with the Gen 2 technology essentially expanded ClearSign's addressable market. We've also seen increased interest and engagement from major global refiners; their larger throughput means larger heaters with many more burners. Previously, our orders were for much smaller heaters with 5 or 8 burners. The recent orders for 32 and 36 burners are larger projects, so there's more revenue as those orders progress.
One of the events we highlighted was the process burner demonstration at Zeeco on the 23rd. Can you describe how that event went and who attended?
It was really successful. The burner ran through all of its paces. The NOx performance was good. It ran from 100% natural gas to 100% hydrogen and demonstrated a smooth transition back to natural gas. We put the burner through its paces, demonstrated safety criteria, and held information sessions for customers. Attendance was significant: about 23 people were there. Among those were representatives from eight large refiners or national energy companies, along with consultants and heater manufacturers. Also notable was our collaborative partner Zeeco: the President and CEO of Zeeco came and gave a welcome introduction to ClearSign at the demonstration. His presence and the manufacturer’s support was a powerful message to the customers in attendance.
What sort of feedback have you received post-event?
The feedback has been positive. We had conversations with customers who attended as well as follow-up discussions at the American Petroleum Institute conference the week after our demonstration. People who attended or who spoke with attendees reported favorable impressions. I'm quite confident we hit the mark with this demonstration and that it was a great success.
Are these customers discussing the regulatory environment right now?
Yes. Many refineries and attendees are focused on projects they have and came to check out the technology. They need to understand their best plans to meet regulatory compliance — for example, new regulations being formalized in Texas and requirements in California. The demonstration gave them a chance to see technology they hadn't seen before and evaluate it in the context of their compliance plans.
One of the projects you mentioned is the 26-burner order that was shipped in December. Is that still on schedule to be installed?
Yes. To clarify, the project was completed in September and actually shipped in early January. The burners are on site and are due to be installed around the middle of the year; we expect installation in July and project start-up scheduled for October. Things can change, but that is the current plan.
That's for a petrochemical company. Does that get us into the chemicals market?
Yes. It's the second chemical customer we've had; the first was a midstream heater on the U.S. Gulf Coast. Looking to the long term, part of our plan is to get into high-temperature applications, such as ethylene furnaces and downstream reformers — very large potential markets. The heaters we're starting up in October are refinery process-type heaters in a chemical plant, and the flat flame configurations for the California project are a significant stepping stone toward the high-temperature work we plan for ClearSign's long-term growth.
You brought up the M1 installation in a chemical plant about a year ago through Tulsa Heaters Midstream. We just announced another M1 order from them today. Is that correct?
That's correct. Tulsa Heaters Midstream was the first adopter of the M1 Series product and the heater on the U.S. Gulf Coast was the very first M1 that was shipped. We expect repeat business; I would expect them to come back a year later. Regarding the M-Series products in general, I'm feeling very good. While orders have not been numerous recently, interest and inquiries have been strong, with more coming in this week. We have an M25 started up in Midland, an M1 shipped and waiting to be installed, another M25 shipped and waiting to be installed, and many M1 and M25 quotes in the pipeline. The market is there and I'm confident in it.
You mentioned a couple of startups pending. There's also a flare project poised to start up very soon. Is that correct?
Yes. The formal source testing for the flare had to wait for a particular component outside our scope to be installed; that component is now in place and the source testing is scheduled for next month. That will be the first source testing of our new generation of flares in the California market. We've had success in the flare product line and have done systems projects where our burner technology expands into a full system in the $750,000 to $1 million range. We have the flare starting up next month and another full system project in fabrication that is due to ship later this year. Completing the source testing and getting formal recognition of performance will be powerful for the flare market.
We've seen repeat orders from a customer in the flare line. Are you having similar repeat discussions with other customers and product lines, such as the process burners?
Yes. We believe the flare front will have future needs and there are other applications, predominantly in the California market. We're also in conversations with customers about future products for process burners, including the 32-burner order where discussions about future work are already underway.
Are you still confident in the status of ClearSign's business and the proposal pipeline we've discussed in previous calls?
Yes. While order intake has been lumpy, inquiries and customer engagements have not slowed. We continue to receive inquiries for process burners and have active interest in midstream. We have a 36-burner order and a 32-burner order in-house and being processed. There's a substantial backlog in process burners, and many customers are watching the installation on the U.S. Gulf Coast due to start up in October. We expect a significant pickup after that project is up and running, as customers gain confidence from that start-up.
Any final comments before we open to questions?
Yes. Beyond the purchase orders and big events, there's a lot of engineering work and operational activity happening at ClearSign. Our headcount is small and the team is doing a lot across engineering, finance and operations to keep the business running. I want to publicly extend my thanks and appreciation to the staff for their hard work and belief in ClearSign.
Fantastic. We will now open up for questions and read off some questions that were sent ahead of time. Operator?
分析師問答
There are no questions in the queue at this time. Apologies. Your first question is coming from Amit Dayal from H.C. Wainwright.
Matt went through pretty much a lot of the things I was going to bring up. But just one clarification, Jim. It looks like you have five or six project starts between 1Q and 2Q. Are some of these at least underway at this point?
I am sorry, could you repeat that question, please?
I was saying it seems that you may have like five or six project starts between 1Q and 2Q. Are these underway at this point? Or are some of these at least going for you?
They are underway in the sense we are working on them. For start-ups, like the flare source testing, there's a lot of preparation and planning even though the actual start-up events typically happen over a few days. The flare will be a significant event. The large burner start-up on the Gulf Coast is scheduled for October, and we will be supporting the installation scheduled for July. With repeat customers for the M-Series, they are getting familiar enough with the products that they do not always require us to be on site for start-up, though we provide technical support. We also have a very large flare order in production and a second large flare due to complete fabrication in Q3 and be on site later this year. These start-ups are significant not only for completing each project but for what they mean for future orders and growth. We also have additional quotes and proposals in the pipeline with customers who are likely to move forward after seeing these completed projects and source tests.
Your next question is coming from Peter Gastreich from Water Tower Research. Peter, please double-check your line to ensure you're not muted on your end. There are no further questions in the queue at this time.
Apologies, I had muted my line. Congratulations on the results. It's great to see momentum in the orders this month and I appreciate the comprehensive presentation. A couple of my questions were already answered. One industry-wide question: you talk a lot about comparisons versus incumbent technologies and the advantage is clear. Can you share any thoughts about the landscape for any competing new technologies that are out there?
Thank you, Peter. The incumbent technology we aim to displace is Selective Catalytic Reduction (SCR). We believe ClearSign offers a more economical option for customers to comply with emissions limits. There are other burner manufacturers and vendors that promote competing technologies, but we do not see a lot of solutions that match our approach in both performance and economics. ClearSign has strong name recognition in the low-NOx burner market. New entrants face significant barriers, including the need for specialized engineering expertise, full-scale furnace demonstrations, and specific manufacturing relationships. Our relationship with Zeeco helps overcome the manufacturing barrier, and for newcomers without such partnerships, getting into this market would be difficult.
That concludes our Q&A session. I'll now hand the conference back to Jim Deller, Chief Executive Officer, for closing remarks. Please go ahead.
Thank you, operator. Thank you, everyone, for your interest in ClearSign and for taking the time to join our call today. I do thank you also for the questions that you've sent in and for the questions you've asked live. It's always good to get feedback. We look forward to updating you regarding our developments and speaking with you on our next call. In the meantime, we post updates on LinkedIn and provide less formal messages there. Please keep checking our website and follow us on LinkedIn for developments.
Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.