管理層發言
Greetings. Welcome to the ClearSign Technologies 2Q '26 Earnings Conference Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Matthew Selinger, Investor Relations. You may begin.
Good afternoon, and thank you, operator. Welcome, everyone, to ClearSign Technologies Corporation's Second 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 products will be successfully completed, whether ClearSign will be successful in expanding the market for its products, and the 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 on the call with me today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So with that, I am going to turn the call over to Jim Deller. So Jim, please go ahead.
Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and your interest in ClearSign. Like our more recent conference calls, we will use a Q&A format for this session. Some of you have sent questions ahead of time, and we incorporated those into the questions we will cover. For the call today, Matthew will lead a question-and-answer session where we'll go through the different business units, much like our previous calls. Many of you may have seen this, but you can send in questions ahead of time to our Investor Relations at mselinger@firmirgroup.com. We will start with Brent Hinds going over the company financials for the second quarter of 2026. Brent?
Thank you, Jim, and thank you, everyone, for joining us here today. Before I begin, I'd like to note that our financial results on Form 10-Q were filed with the SEC last week. With that, I'd like to give an overview of our financial results for the second quarter of 2026. For the second quarter of 2026, the company recognized approximately $560,000 in revenues compared to approximately $133,000 for the same period in 2025. The year-over-year increase in revenues was predominantly driven by delivering a portion of our flare system order and completing multiple CFD studies and spare parts orders. Our second quarter gross profit margin was approximately 41%, which was relatively flat year-over-year. Our net loss for the second quarter decreased by $373,000 compared to the same period in 2025. The decrease in our net loss was predominantly driven by a $368,000 decrease in general and administrative expenses. Our general and administrative 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 ultimately dissolved after our Annual Meeting of Stockholders. Now let's shift our focus to cash. Our net cash used in operations for the second quarter of 2026 was approximately $1.2 million compared to approximately $511,000 for the same period in 2025. This year-over-year change was predominantly driven by timing of customer cash collections. As of June 30, 2026, we had approximately $9.9 million in cash and cash equivalents. Now I do believe it's important to note that subsequent to June 30, 2026, we raised additional funds through a private equity offering with a long-time investor. We sold 500,000 shares at market value, or rather $3.54 per share on July 21, 2026. This added approximately $1.7 million in net proceeds to our cash balance. Considering this addition of cash, our pro forma June 30, 2026 cash balance would be approximately $11.6 million. As noted in our Form 10-Q, as of August 8, 2026, we have 6.8 million shares of common stock outstanding. This share count includes our most recent share offerings. And with that, I'd like to turn the call over to Matthew Selinger.
Thank you, Brent, for the financial overview. Jim, and thank you both for joining me today here. Let's start the call at the corporate level and discuss some recent developments there, if we could. Jim, Brent mentioned a capital raise recently. Could you shed some color on the decision-making process for the two raises that just happened?
Yes, certainly. So the first, we're approached by a long-term investor group that expressed an interest in acquiring some more shares. From a company perspective, having a stronger balance sheet is always good, especially when talking to large customers. So we went ahead, we arranged a small strategic raise. This was done at market pricing and was common stock only. Following that, a long-term private investor reached out to us and expressed an interest in topping up their ownership of the company to maintain their percentage. Again, we raised a simple direct placement. In this case, it was done at market pricing. And again, it was shares only.
Okay. Great. Now the other development was just announced last week. This was the announcement that former Exxon Global Technology leader, Larry Saddler, joined the Board of Directors. Jim, I know you've known Larry for a while. Maybe give a little background there on that relationship.
Yes, certainly. Firstly, I'm really pleased that Larry has decided to join us at ClearSign. I've known Larry, I think I first met him back in the 1990s. He was working on the Baytown refinery for ExxonMobil. We've worked together. I've stayed in touch with Larry since joining ClearSign. Larry's career has progressed up through the ExxonMobil organization, both with technical oversight of fired equipment, which includes heaters and burners, and also up to the corporate level where he's overseen policies and how the company assesses heater performance and new technology. From our perspective, his experience and insights are extremely valuable to ClearSign. And, in general, he is a fantastic person and has a great reputation within the industry.
And I know you and I were talking about this, and you mentioned that he wanted an opportunity to see the newest and latest burner technology himself before joining us.
Yes, that's correct. Larry has a lot of experience and is understandably very cautious about who he signs on with. Prior to agreeing to join us, he wanted a chance to come and see the ClearSign technology in action for himself and verify that it lived up to the reports he had heard. Larry actually came in ahead of the customer demonstration that we did earlier this year in April. He spent a day with us and conducted his own testing. We spent a day with him, essentially letting him direct the testing, kick the tires on the burner and the technology. He then stayed for the demonstration day itself. Since then, he has agreed to join the company. On behalf of all the directors, we are really pleased to have Larry join us.
Well, I think it's a great addition for the Board and the company. So let's shift now back to ClearSign's business and into the product lines. The last couple of calls, I know we've endeavored to give some visibility into the pipeline, in terms of proposals for the product lines, including both process burners and the M-Series midstream burners. On the last call, I think the last call we left off, I'll quote you, Jim, saying, 'we had approximately 50 or so proposals out for the M-Series.' Now since that last call, we've announced orders for six M-Series burners, which is, again, back-of-the-envelope numbers, call it 10% to 12% of that backlog converted to orders. So can we talk about some of these M-Series orders first?
Yes. Certainly.
Okay. So the first two in chronological order were from Tulsa Heaters Midstream and they're slated to go to an operator in West Texas. Could you talk more about these first two orders?
Yes. So for those who don't know, Tulsa Heaters Midstream is a midstream heater manufacturer based in Tulsa. They were the first company to install one of our new M1 burners, which went into a chemical site on the Texas Gulf Coast. That burner ran very well, and they have experience with our burners. These new orders are going to a multinational energy company down in the Permian Basin in West Texas, which is probably the biggest midstream region for us in the United States. Both of these first two burners are for new heaters and are going to the same customer on the same site.
Yes. And these were described as large M1s and they were separate orders, correct?
That's correct. I believe it's the same project for the client, but they placed their orders for the heaters one after the other. Tulsa Heaters Midstream received purchase orders from the client and in turn placed their order with ClearSign.
Okay. And after those two separate orders for the same end-use customer, we had an order for three burners from a different heater manufacturer, and this also is going to West Texas.
That's correct. This is actually for a different end user, also a Fortune 500 midstream customer in the Permian Basin. These three burners are for the same site and are also very large M1 Series burners.
So same size. So these first, call it five, are all the same?
They actually are. For ClearSign, and for efficiency, it's interesting that we have five of the same size burners: two going via Tulsa Heaters Midstream and three going via the second heater manufacturer to their customer in the Permian Basin.
Okay. And we'll talk about size, meaning dollar amounts here in just a moment. But I know it makes sense to dive into this order too, because this came from a different heater manufacturer and the processing of this order is a bit different for us. Is that correct?
It is. For a long time we've evaluated scalability and growth options for ClearSign and recognized that a royalty or licensing model gives us the ability to scale. This order is on that basis. The customer has the ability to manufacture burners. What they've actually purchased is the right to manufacture these burners themselves from ClearSign drawings. So we are not doing the manufacturing. We will be involved in inspection and will ensure they work, but this is a first step toward hopefully getting a royalty-type business up and running that we can grow in the future.
Okay, which is very interesting. And again, just to clarify, this is the heater manufacturer that will be manufacturing the burners, not the end-use customer?
Correct, yes.
Okay. So it is interesting though, Jim, that ClearSign has been focused on technology-level margins. Does this licensing model affect profit? And secondly, is this a model we will continue to pursue?
Yes. When we leverage our technology, the M1 Series burners drive a lot of value to customers in order to meet tight NOx regulations. We are able to maintain the profit margin dollars on all of these burners, whether they're sold as manufactured units or under a licensing arrangement. Under a licensing agreement, the revenue recognized by ClearSign is lower because the customer fabricates the burner themselves rather than ClearSign having it fabricated and shipping it. However, the margin dollars to ClearSign remain comparable, because the licensing or royalty structure preserves the value we deliver. So while licensing reduces top-line revenue per unit compared to a fully fabricated sale, it can still be attractive for scalability and keeps ClearSign's economics aligned.
Okay. Great. And then just to round out these six orders, just weeks ago we did receive another M-Series order from Tulsa Heaters Midstream. This order was a little bit different. Is that correct?
This is a smaller heater for them, a smaller burner for us, but it is going to that same site and the same client as the first two orders.
Great. So when we say smaller or larger M1, let's kind of break these down. What would the price range be for the M-Series, and maybe talk about the model sizes, M1 or M25?
The M1 is our top-tier, high-tech burner. It provides great value to customers because of the NOx emissions it allows them to achieve. The price point for the M1 is at the higher end. The M25 is a slightly detuned version targeting a less stringent NOx requirement and is priced to be competitive with other burner products. The M25 price is less than the M1. For example, large M1s will go north of $200,000 per burner, while small M25s can be around $40,000 per burner.
Okay. And five of these are these large M1s, correct?
Yes. These are not the very largest M1s; I gave a north of $250,000 earlier, but these were just shy of $200,000 each as a complete burner. Obviously under the royalty arrangement, that pricing is less, but the margin is still similar.
Okay. So the two things that go into the cost or sale prices are model and size. On the top end would be large M1 around $200,000-ish and the bottom would be the smaller M25.
That's right. We've given general guidance of about $100,000 per burner as representative of the whole range, but typically the large M1 is towards the upper end of that range.
And in lieu of these recent sales, Jim, how does the continued pipeline still look?
It still looks really active. We continue to get inquiries. It's a little difficult to track because customers, particularly heater manufacturers, now include ClearSign burners in their proposals to end users without always coming to us for a fresh quote — they already have quotes for common sizes. That means there are quotes out there to customers that we don't always know about. We are seeing projects move quickly sometimes that we were not tracking because heater manufacturers include ClearSign technology in their conversations with end-users. So the pipeline is active, and the prior estimate of about 50 proposals remains a reasonable number.
Got it. So even if we still attach that proposal pipeline of 50 ballpark, that's still a safe number.
I think that's a good number, yes.
Okay. We do. So then let's turn to process burners and some of the bigger projects that we've had already in process. We previously announced an order for the next phase of a 32-burner process burner project for a California refinery. How is this project progressing? Maybe give a little color on this one as well?
Yes. This one is right on track. We announced a detailed engineering and testing order for this project and that work is going well. The burner has gone through computer modeling and engineering, and it looks great. The client has seen it and is on board. The burner is being manufactured and is scheduled to go into the test furnace within the coming weeks, so we'll get to see this burner in action for the first time. This burner is different from anything we've put out before — the flexible fuel technology developed under the SBIR grant gave us a highly configurable burner platform. This particular burner is long and thin and designed to run the flames up the wall of the client's heater. I usually refer to it as a flat-flame burner.
Call it flat flame?
Yes, I generally call it a flat-flame burner. We'll be getting it into the test furnace and running it, and the client will be able to see it. Once approved, we expect to move into the manufacturing phase and start building these burners for the first heater retrofit in California.
But in this new application, it grows our addressable market in two ways: one immediate and another longer-term potential pathway. Is that fair?
Yes. The configurable burner technology allows us to put burners into heaters we couldn't address before. Heaters needing long, flat burners become good targets for ClearSign technology, which increases our addressable market. Looking further ahead, there are larger, higher-tech processes like coker furnaces and ethylene furnaces that commonly use flat-flame burners. The burners we're supplying for this order into a refinery can't be dropped directly into those processes without more development, but this is a significant step in that direction. It demonstrates that our burner technology is adaptable and can be developed into these new applications. Those processes can have multiple identical heaters side by side, so an order for that site might involve hundreds of burners rather than tens.
Well then, switching projects, the other one we've talked about is a 36-burner order slated to go to Texas. This differs as well. Can you describe how this one differs and provide an update on the status?
These burners are different in another way. They are round burners fired horizontally, mounted on opposite walls of the heater so they fire towards each other. There are a significant number of heaters of this configuration, and showing we can do this opens up that market for us. The initial order for the engineering and the CFD has gone very well; the burner looked great. Unfortunately, there's been a delay in the client's financing. I can't speak to the client's internal details, but the project is on hold for the time being pending resolution of that financing. We'll keep everyone posted, but that project has progressed as far as it can today.
Okay. All right. And the last one is the 26-burner order going to a petrochemical company on the Gulf Coast. We've discussed this for some time and people have been awaiting the installation and firing up. Where is the status of this project?
It's right on track. We are currently going through training for site-specific requirements for personnel going to the jobsite. We're working through last-minute spare parts the client wants to have on hand. We're looking forward to the installation and startup; everything is right on track.
And I know you said on the last call that there are a lot of people in the industry watching this.
Yes, absolutely.
So with that, let's talk about how you feel about the pipeline for the process burners. What's your view?
I'm really excited. To round this out, we have a number of projects in progress. The Gulf Coast project is the most advanced and is going to be installed and started up. The refinery project in California is moving into testing, and we have other startups. Just among three customers that are starting up right now, we've been told about over 20 heaters that those three customers are planning to bring to ClearSign, at least four proposals. There are no orders yet on those, but there's a lot of potential work contingent on the experience obtained by our customers once they have hands-on experience with our equipment.
And Jim, to highlight that again, you mentioned three customers discussing over 20 heaters among them. Did you touch on a dollar ballpark per heater in that scenario?
Heaters vary greatly in size, but conservatively, including CFD engineering, I'd say a round number of $2 million per heater on a revenue basis is a safe representative number.
And that's just a snapshot of what you're seeing in advanced conversations?
Yes.
Okay. Well, then let's move to the flare product line. In the past, we've talked about initial installations and full-scale products being installed. What's a good update on the flare product line?
This has been really active this last quarter. First, we had a project in California where we replaced the burner element in an existing flare. The client had purchased a flare from a competitor which didn't work properly; they came to us to fix it. We sold a ClearSign flare burner to install into that flare. The installation went fine, the project has started up, and it has gone through source testing. We have not yet received the formal test report, but we were there when the data was taken, along with the client, and everyone was very pleased with the results. We expect very good news. That same client, on a different site, is currently receiving parts for our first full-system flare. The stack and the bulk of the equipment are on site, and it's going through installation. There's a little more to arrive, but that will be starting up in the coming months. We believe that client has other permits in process that they have identified for ClearSign equipment.
And then on the flare product line, can we talk about the evolution of pricing and project scope? Earlier we referenced smaller items around $100,000, but how has the product developed?
Using the reference of that first project where we sold a ClearSign burner into an existing flare, just the replacement burner itself might have been in the $150,000 to $200,000 range. Since then we have developed the product line into full systems where we now sell the stack, controls, blower, and everything else. Those full systems have typically ranged from about $750,000 to $1 million. Some proposals have gone up to about $1.5 million. Based on the quotes we're getting, the flare product line is becoming a meaningful revenue stream for ClearSign.
Yes. I don't think many of these are going to move the needle individually, but collectively they matter.
Exactly. Yes.
So stepping back and looking at the multiproduct lines, how do you feel about the overall status of ClearSign's business?
I'm really optimistic. Getting M1 burner projects into top-tier clients in the Permian Basin is significant. Those customers see our technology and can pull ClearSign into other heater orders. The licensing opportunity is encouraging for scalability. The flare product line is becoming meaningful and we're getting start-ups that demonstrate the technology. For process burners, the big news is getting start-ups and seeing customers' plans to work with ClearSign after they have hands-on experience. Overall, activity and customer validation are increasing, which is very encouraging for long-term revenue.
What should investors focus on for the rest of the year? We highlighted a few items previously, but what are the key milestones?
First, the Texas startup is going to be very important and meaningful for ClearSign. It's currently scheduled for October, and we'll report the results as soon as we have them. Beyond that, we have the large flare being installed that we'll get started up, and we expect additional orders from the flare product line as permits are completed. Keep an eye on the M-Series — those can turn quickly and sometimes orders arrive without our prior knowledge because heater manufacturers already include ClearSign in their proposals. So there is potential for more M-Series work coming in as well.
Okay. Before we turn over to Q&A, is there any other commentary you'd like to give?
Yes. I want to shout out the ClearSign team. We are extremely busy this quarter with a lot of testing, start-ups, and site work. We're scheduling resources carefully to cover it all. The team is doing a great job and they're all very focused on what's ahead.
Fantastic. So with that, we're going to open it up for Q&A. Operator, would you take a moment and poll? We'll segue into the question-and-answer period.
分析師問答
The first question is from Sameer Joshi with H.C. Wainwright.
I would like to focus on the M1 series here. You have three burners to be delivered in the third quarter and then two plus one to be delivered in the fourth quarter. I would like to understand the difference between the core M1 versus a smaller M1 series burner. What is the difference in size or pricing?
Thank you, Sameer. A few things differentiate the products. The ClearSign core is our IP — the structure of the burner that enables low NOx emissions and that is used across our flare burners, process burners and M-Series. For the M-Series specifically, the M1 has a high-tech arrangement of nozzles and flow controls within the burner to manage mixing and chemistry to achieve low single-digit NOx emissions. The M25 is a sister product that is simplified and targets a less stringent NOx requirement; it doesn't have the same sophisticated flow control, so there's less fabrication complexity and less metal. The M25 is priced to be competitive with other market burners, and the M1 occupies a unique place by enabling customers to avoid costly downstream solutions like catalytic conversions to meet stricter NOx limits.
Understood. We can visualize the California 32-burner project and some of the other projects. But in the midstream, the order sizes are two and three. How should we visualize them being used on site? And what's the maximum size of order in terms of numbers, like could you see 4, 5, 6 or 15 from a single site?
One key difference in midstream is that midstream heaters tend to be relatively small, simple heaters with a single burner in each. So when we sell a midstream burner to a heater company like Tulsa Heaters Midstream, that burner goes into an individual heater. When you see orders for 2 or 3 burners, that usually means the client is buying 2 or 3 separate heaters for the same site. They often sit side by side on the customer's site. Regarding larger orders, we have inquiries for just under 30 burners in a single batch for midstream heaters. So there are opportunities for large multi-burner orders in midstream. They tend to be many individual heaters rather than multiple burners per heater, which is more typical in refinery applications.
Understood. That was helpful. You're accelerating activity, quotes are increasing, and you're delivering products scheduled for 3Q and 4Q. How should we look at the run rate exiting 2026? When might we see double-digit million top-line revenues — 2027 possible or more like 2028?
It's difficult to give exact numbers because we don't control the timing of customer orders in many cases. However, based on the interest, proposal backlog and inquiries — especially in process burners which we believe will be activated as installations occur, and considering flare proposals in the $1 million range and midstream opportunities — I think it's feasible to reach a run rate in the mid-single-digit millions on sales from midstream and flare lines alone, maybe $6 million to $7 million. If process burner opportunities convert as we expect once customers see installations, there is certainly potential to reach double-digit millions, but the primary uncertainty is timing of order conversions and subsequent revenue recognition. So the opportunity is there and I'm confident a double-digit million opportunity exists for ClearSign; the timeline depends on order conversion.
One last question: For the 32-burner flat burner refinery retrofit, physical testing is happening now. What's the timeline for physical testing and how long before you start delivering the 32 burners? Will deliveries be phased or all at once?
The burner for testing is being manufactured and is due to be installed in the next couple of weeks. After installation and coordinating witness testing with the customer, typical running time and witness scheduling will take about 3 to 4 weeks. I'm expecting the customer to witness that burner in the early October timeframe, though that's an expectation and not guaranteed since we don't control customer schedules. Following a successful test, the client would need to issue a purchase order for fabrication. Fabrication would likely take around 3 to 4 months after the order. There are two heaters involved in the project with 32 burners across them; the client indicated they would purchase one heater's worth of burners first and then follow on with the second heater. So fabrication is expected to be done in two phases.
The next question comes from Peter Gastreich with Water Tower Research.
Congratulations on the results. It's great to see momentum building across the M-Series, process burners and flare lines. I appreciate the detail in the prepared remarks. I have a couple of follow-ups. First, your newest Board addition, Larry Saddler, looks like a big positive. You mentioned he took time to assess the technology before joining. Could you elaborate on what he did during that assessment?
Thank you, Peter. I don't want to speak too much for Larry, but during the time we discussed his joining, he visited our test site at Zeeco and spent time with our team. People with field experience often want to perform certain extreme tests to validate ruggedness and reliability beyond typical customer specifications. Larry wanted to put the burner through extreme cases to test stability and ruggedness and to evaluate NOx performance across a wide range of fuels, beyond what you'd typically demonstrate on a customer job. He spent a day directing those tests and then joined us on a broader demonstration day with many industry attendees, which gave him additional perspective and exposure to market reactions. He then decided to join the Board.
Second, you previously called this year's burner wins a stepping stone toward ethylene furnaces and steam methane reforming. I recognize that's longer-term, but what's the roadmap for R&D and qualifications, potential partners, and a realistic time frame for those markets?
Good question. The flexible fuel burner platform we developed provides configurability; the flat-flame variant going into testing is the first demonstration of that flexibility. Taking the burner into higher-tech, extreme operating conditions like down-fired methane reformers or ethylene furnaces requires additional investment and development. My plan is to partner with an industry client interested in that technology and work with them through development so we can ensure the product matches an end user's needs and has a destination. We have had initial conversations with potential partners. Based on prior SBIR development timelines, the flexible fuel project took about two years from start to finish; developing a burner for these extreme processes might similarly take around two years once started, likely partly funded by an industrial partner with a project lined up at the end. In terms of resources, Zeeco has test furnaces suitable for ethylene burners and reformer burners, and our team has relevant experience. The opportunity is significant — the ethylene burner opportunity alone is roughly equal to the entire refining burner opportunity, and a single down-fired reformer can have over 100 burners — so it makes sense to pursue this as a strategic longer-term growth path without detracting from immediate priorities.
Operator, I'm going to interject with a question that was sent by email. Jim, we've received a few questions about the sales team and outreach. Would you give an overview of the sales process and outreach?
Yes. Sales at ClearSign is largely a collaborative technical process. We're providing a technical solution that involves integration with heaters, controls and project planning. Much of selling is working closely with engineering firms, heater manufacturers and technical leads at refineries. ClearSign has experienced engineers and CFD modelers and many industry connections, which is a large part of bringing orders in. We do have outreach activities — one person dedicated full time, team members at conferences, and active presence on social channels like LinkedIn — to generate awareness and leads. But a majority of sales activity is collaborative technical engagement to fit ClearSign technology into specific customer contexts.
We have no further questions in the queue. I would like to turn the floor back to ClearSign's CEO, Jim Deller, for closing remarks.
Thank you, operator. And thank you, everyone, for your interest in ClearSign and for taking the time to listen to our call today. We look forward to updating you regarding our developments and speaking with you on our Q3 2026 call in November. In the meantime, please keep checking our website for developments, and for more behind-the-scenes updates, please follow us on LinkedIn. I really appreciate your time. Thank you very much.
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.