ClearSign Technologies - Earnings Call - Q4 2024
April 2, 2025
Transcript
Operator (participant)
Please note, this event is being recorded. I would now like to turn the conference over to Matthew Selinger of Firm IR Group. Please go ahead.
Matthew Selinger (Founder and Principal)
Good afternoon, and thank you, Operator. Welcome, everyone, to the ClearSign Technologies Corporation Fourth Quarter and Full Year 2024 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. 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 product, 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 ending December 31st, 2024. 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. On the call with me today are Jim Deller, ClearSign's Chief Executive Officer, and Brent Hinds, ClearSign's Chief Financial Officer. At this point, I would like to turn the call over to Brent Hinds. Brent, please go ahead.
Brent Hinds (CFO)
Thank you, Matthew. Thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-K was filed with the SEC on March 31st. With that, I'd like to give an overview of the financials for the fourth quarter and full year of 2024. For the fourth quarter of 2024, ClearSign recognized approximately $590,000 in revenues compared to $1.3 million for the same comparable period in 2023. The year-over-year difference in revenues was driven by a decrease in business activity. During the fourth quarter in 2023, we shipped eight process burners and completed two customer witness tests for our California refinery customer, whereas during the fourth quarter in 2024, we shipped two boiler burners and executed a process burner engineering study.
Now, keep in mind this process burner engineering study led to a follow-on purchase order of 26 burners, as noted in our November 27th, 2024 press release. For the full year of 2024, we recognized record revenues of approximately $3.6 million compared to $2.4 million in 2023. This is approximately a 50% increase year over year. This increase was driven by overall year-over-year increase in business activity. 2024 revenues were predominantly generated by the shipment of 25 process burners to two separate California refineries, whereas in 2023, revenues were predominantly generated from the shipment of eight process burners and three separate customer witness tests. Our gross profit margin for the year-ending 2024 was approximately 31.1% compared to 34% during the comparable period in 2023. This year-over-year decrease in margin was a direct result of our large 1,200-horsepower, 2.5 PPM boiler burner installation.
Since this was the first installation of a boiler burner of this size, we incurred greater-than-expected startup costs during the fourth quarter of 2024. Now, I'd like to shift focus from revenue to cash. Our net cash use in operations for the year ending December 31, 2024, was approximately $4.4 million compared to approximately $3.2 million for the same comparable period in 2023. This $1.2 million year-over-year decrease was driven by a million-dollar decrease in contract liabilities, which basically represents monies received from customers prior to revenue recognition. Now, turning our focus from cash to the full-year income statement, our net loss for the full year of 2024 was approximately $5.3 million, which is an increase of approximately $100,000 compared to the same period in 2023.
This increase in net loss was due in part to a one-time non-recurring expense of approximately $400,000 related to our decision to place our China entity into a dormant status. Now, I need to note that yesterday, on April 1st, 2024, we received a letter from NASDAQ stating that we no longer meet the minimum bid price of $1 per share. As set forth in NASDAQ's listing rules, according to the rules, we have been given a period of 180 calendar days or until September 29, 2025, in which to regain compliance. To regain compliance, our common stock's closing price must be at least $1 per share for a minimum of 10 consecutive business days during the 180-day cure period. As of December 31st, 2024, we had approximately $14 million in cash and cash equivalents, with approximately 50.2 million shares of common stock outstanding.
From a financial perspective, we believe we are well-positioned to meet current customer demands, deliver on our project pipeline, and scale our business to profitability. With that, I'd like to turn the call over to our CEO, Jim Deller. Jim.
Jim Deller (CEO)
Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and for your interest in ClearSign. We're going to use a similar format today to the previous call. We have received overwhelming positive feedback from this change and believe this provides a more engaging and assimilable conversation. Matthew Selinger will lead a question-and-answer session where we will go through the main content of this call, much like the last call. We will cover developments in our product line, but I'll also talk about some general themes and strategies that we are implementing and reference this to our sales and product line updates to provide some insight into overarching ambitions and progress of a more strategic nature.
We will end up with an outlook for the rest of 2025 and into 2026, and then, as always, open up the call for Q&A. A quick note regarding the Q&A: in addition to calling in, if you wish, you can also send in questions ahead of time to our investor relations at [email protected]. So, Matthew.
Matthew Selinger (Founder and Principal)
Great. Jim. Let's get started. As Brent mentioned, ClearSign just recorded a record revenue year. Could you give a little more of what this was comprised of, what led to this?
Jim Deller (CEO)
I can. Before we start, if I can, I think it's good to just look back a little. If we look back to 2021, well, we came in at just over $600,000 in revenue, as Brent mentioned, or it dropped slightly in 2022. Then, as Brent mentioned, we're at $2.4 million in 2023 and then closed out last year at $3.6 million. Last year's revenue was predominantly due to the large refinery burner process order that we shipped out to Los Angeles. That was 20 burners. Those burners are still there on the job sites. We're expecting them to start up early in the third quarter of this year. The installation and shutdown has been a delay on site. In addition to that project, we had some burners shipped out to Kern Energy, who've continued to be a good customer of ours.
There were also some midstream boiler burners that rounded that out.
Matthew Selinger (Founder and Principal)
Great. Thanks so much. In your opening comments—excuse me—you mentioned some higher-level themes and strategies. Before we get into the individual product lines, let's kind of start with that, if you don't mind. Could you say a little more about some of these themes and strategies you're talking about for 2025 and 2026?
Jim Deller (CEO)
Certainly. I know this actually started some time ago, but I think it's time to start explaining what we are looking to do as we expect some of these results to roll out. Going back to when I joined ClearSign back in 2019, our first objectives at that point were to prioritize and commercialize the technology that we had as what we called low-hanging fruit. That was the oil refining process burners and the boiler burners. We gave ourselves a mandate to develop that technology into a form that the clients would need and the clients could use and would be easy for them to install and for the operators to run with. In addition to that, we also realized that we had to develop channels to market and be able to provide these products and technologies in a manner that the customers were used to buying them.
What that entailed is, or resulted in, us forming a collaborative agreement with Zeeco. Zeeco is, for those of you who don't know, Zeeco is the second largest burner manufacturer in the world. As part of the refining burner supply, it is a requirement that the burners are demonstrated at full scale in an industrial test furnace to prove the emissions and the operation requirements for the customer, and also typically that the products are manufactured in a shop that has been validated and meets the certification requirements of the refining customers. We had to come up with a way to deliver products with that capability, and we did that by forming a relationship with Zeeco. On the boiler burner side, you have to have a customer that provides service to—or sorry, you have to have a partner that provides service to customers.
We did that through a relationship with one of the leading boiler service companies in California, California Boiler. They take care of the customers. They formed a subsidiary called Rogue Combustion. With our technology and Rogue Combustion providing the controls, they actually deliver the ClearSign technology into the boiler market, marketed as a Rogue burner. I mean, that's a summary, but that gave us the ability to get the products recognized in the market, to make initial sales, and to start the growth of our business and, as reflected in the revenue. All right. Jumping forward to today and more recent times, we recognize that there is much bigger opportunity for ClearSign.
We have the ability, with our patents and our staff, to develop technology that's applicable to much bigger markets, and that we can broaden the regions that we sell into, the scope of our orders, and actually diversify our portfolio while staying true to the core competencies and the skills of ClearSign. That is what we're starting to roll out now.
Matthew Selinger (Founder and Principal)
All right. Kind of in summary, and I think we'll kind of hit on this throughout the call, because high-level themes are diversifying product lines, kind of like diversifying within those product lines, and continuing to leverage sales channels. Is that correct?
Jim Deller (CEO)
Yes, that is. On the sales channels, in addition to partners like California Boiler and Zeeco, we sell a lot to third parties, for example, heater manufacturers, as we sell to them. They include our products in their future offerings and will bring orders to us. As we sell to new heater companies, part of that expanding our sales scope is getting more heater companies familiar with our equipment and actually selling to more customers. They continue to be a sales channel for us going forward.
Matthew Selinger (Founder and Principal)
Fantastic. Let's dive into the product line. Starting with the process burner line, there have been a lot of developments recently, and you touched on this. You mentioned the name Zeeco, obviously, in your comments moments ago. Could you touch on the most recent announcement with Zeeco and what that means for the company?
Jim Deller (CEO)
Yes, I can. This was key for us. The announcement was late last year. As I mentioned, we first formed the relationship with Zeeco. The initial requirements were to have access to the burner testing and the manufacturing capabilities of Zeeco. As we discussed our collaboration, the long-term vision for both of us was that ClearSign refinery process burners would ultimately become a Zeeco product line. At the time, back in 2019, we recognized that the timing was not right to launch that then because of the newness of the new ClearSign technology. Coming forward to last year and the progress that we have made and the orders, now obviously what Zeeco has seen at ClearSign, we have reached the point that, for both of us, we believe that it made sense to go and move our relationship to this next level. The announcement was just that.
We announced a co-branded Zeeco ClearSign burner line. Zeeco have now included ClearSign as a page in their own website. We've developed joint marketing materials. Over the last few months, we have conducted teach-ins to the Zeeco sales team because part of this arrangement is that the very large Zeeco sales team now has ClearSign technology as an offering that they can discuss and present to their customers.
Matthew Selinger (Founder and Principal)
You're basically saying that with the product maturity, it was deemed that this is the right time, and now the co-branded product has been launched. Is that correct?
Jim Deller (CEO)
That's correct.
Matthew Selinger (Founder and Principal)
Fantastic. Is there any sort of initial feedback you can give in terms of these teach-ins or working with Zeeco?
Jim Deller (CEO)
I mean, it's early days yet, but I've been in the teachings. I was part of them. The development was met with excitement with the Zeeco sales team. We had a lot of discussion following the presentations. They seemed very enthusiastic. Even just looking at our team here working with Zeeco, for example, the marketing teams, the collaboration and the urgency that they have put together the materials and got the website ready, as an example, has been very pleasing. I am very enthusiastic and excited about this development.
Matthew Selinger (Founder and Principal)
Yeah. That's a great development, Jim. Also, very recently, in terms of the process burner line, it was announced that the debut of the M-Series. Can you give a little background of what the M-Series is, maybe what it's designed for, and what differentiates this from our traditional product line?
Jim Deller (CEO)
Yes. Thank you, Matthew. I think before we actually get into the M-Series, it's probably worthwhile talking about the midstream market. We talked a lot about the refining market. The midstream is really the gas processing and the transport part of the petrochemical business. There is a different style of heater and a different heater manufacturer that works in the segment. We had the opportunity back in 2023, I believe the announcement went out in April 2023, to put what was then a modified boiler burner into a midstream heater sold by a company called Tulsa Heaters Midstream here in Tulsa. That heater is based down in a petrochemical company down on the US Gulf Coast. That burner ran well in that heater. It met the low NOx emissions. That was the reason for the ClearSign burner being selected.
Following that, we got a lot more engaged in the midstream industry. We sold orders to names you might recognize now of Exotherm and Devco. We also recognized that this was a big opportunity for ClearSign, especially if we could develop a burner optimized for these midstream heaters. Another part of this story is we hired Matthew Martin, our Chief Technology Officer back late 2023, as part of our plan to grow our capabilities and grow our technology. After hiring Matthew Martin, we invested in a computer modeling system. What that does is, or one of the things that does is, it allows us to test in a simulated fashion a great variety of different product types and product arrangements. With that, we were able to completely reimagine the structure of the ClearSign burners.
We've essentially kept the same mixing and chemistry that allows us to get the low NOx that we do, but we're able to completely rearrange the burner to come up with a very different shape that made it much more efficient to operate in the midstream heater. To cut the story short, we modeled that in the computer. We optimized the design, created drawings from that, took it to manufacture, and built that burner right out of the computer modeling, worked with Tulsa Heaters Midstream to install that burner down in Texas Gulf Coast, and it just ran. It gave 2 ppm NOx in a much more efficient manner. It ran up and down just as you require. It was a great success in terms of a burner rollout. It has been a very exciting development for us, for Tulsa Heaters Midstream, and for everyone that has seen it.
Matthew Selinger (Founder and Principal)
On the heels of that, there was an order announced. Did that create a second burner going to Devco process heaters?
Jim Deller (CEO)
Yes. Very quickly after the results of that installation came out, obviously, we have an NDA. We showed that to Devco. They turned around and placed an order for one for one of their projects.
Matthew Selinger (Founder and Principal)
Then you've been out talking with customers about this new product line and the efficiency savings. Can you give any kind of color of what the market is, feedback, or if there's been some proposals, things like that?
Jim Deller (CEO)
Yes, I can. I mean, everywhere we've shown this burner, it's got really good reception. We've also been able to do that with Tulsa Heaters Midstream. They have obviously seen our burner operation. The customers that buy the heaters are also the customers that buy our burners. We've actually been able to make joint presentations with them. The burner has been very well received. It's early days yet. I don't have any developments to announce right here, but based on the reception, we're very excited about what this can do. Through these conversations, the scope of this midstream industry is vast and varied. It's a great opportunity for us to get into different regions and to diversify ourselves away from just the ultra low NOx refining part of the industry.
Matthew Selinger (Founder and Principal)
It's safe to say there's been a bit of buzz in the industry about this.
Jim Deller (CEO)
I think that's fair, yes.
Matthew Selinger (Founder and Principal)
Okay. Can you give any more color on what we might foresee the future of this product line?
Jim Deller (CEO)
I can. I really haven't talked about plans, so be aware this is not done yet. But I'm a technical guy by background. Understanding the way this burner works, I believe it has a potential to convert into a very good boiler burner. I think there's potential to modify it into a refinery process heater burner for certain applications. Also, I believe that this burner getting 2 ppm NOx exceeds the requirements of many of the opportunities out in the market.
We have the ability to take some of the components out, simplify the burner, still come up with what's very good NOx in the industry, but come up with a great burner for a much broader segment of the market that doesn't need the super low NOx that the typical ClearSign technology does, basically expanding our market into a much more commodity part of the industry, but still with a very high value because of the NOx and the efficiency that this burner can deliver.
Matthew Selinger (Founder and Principal)
Since you could detune it, so it's not as high performance. Let's say someone doesn't need the Ferrari of burners, and you'd have a larger addressable market.
Jim Deller (CEO)
Exactly. Yes. You're going back to a standard family car.
Matthew Selinger (Founder and Principal)
Fantastic. Let's then go to kind of orders in the pipeline. When I talk about orders in the pipeline, this is on kind of our traditional process burner business. You referred to some of these, Jim, in terms of order going to the Gulf Coast. Could you kind of give an overview of what we're seeing in terms of our current process burner pipeline?
Jim Deller (CEO)
Yeah, we can. I think it's important because ultimately, this is the backward-looking revenue and forward-looking revenue. We have talked. We've got 20 burners out in California that have shipped. They're waiting to install. Those are scheduled to install and start up early in Q3 of this year. We've previously announced as well there's a four-heater order for a Fortune 500 chemical company down on the Texas Gulf Coast. Those burners are currently in the testing phase, soon to be demonstrated to the customer. They are also scheduled for fabrication and also scheduled for installation and startup early in the third quarter this year. That's going to be a busy period. Kern Energy continues to be a great customer of ours. They have some heaters there that we are hoping to support them and upgrade the burners in the near future.
We do not have those orders yet, I want to be clear, but that is a project that we are talking about. There is other work with Kern Energy, and there are some other projects we are talking about. I think one thing of note, a bit more forward-looking, is we are starting to get involved in the initiating technology discussions for some big mainstream global refinery heater conversion. This is early days, but at the start of a project, there is normally an assessment of the technologies available, a chance to present them right at the scoping or the FEED phase of the studies. We have not been involved at that stage before. It is typically an 18-month to 2-year or even longer process for those projects to get through to actual orders, but it is very important to get engaged at that time.
The fact that we're being asked to be included and these global customers are understanding what our technology can do for them and that we've got the credibility to be included in those conversations, I think is very significant and, from my perspective, very pleasing.
Matthew Selinger (Founder and Principal)
That's great to hear. Let's shift to boiler burners now. I think early last year, there was kind of a spate of orders in the boiler burner sector, followed by then the ICF report, which highlighted the efficiency of the boiler burners. Since then, it's been a bit quiet. Can you give a little color of what's going on, what you're seeing in the boiler burner market?
Jim Deller (CEO)
I can. I'll be fair, I don't have a lot of detail. We've obviously tracked and dug into this, and the general information we're getting is just that market has been slow, at least the past six months, especially in California. There's just not been much activity. I think the good news is the last few weeks, we've started to see an uptick in inquiries, and it sounds like there are some projects which are being talked about again. That is very encouraging. Also, just while we're talking about boilers, I want to note that we did announce the startup of our 1,200 horsepower, 2.5 ppm NOx burner for a recycling plant up in Bakersfield. That was significant. I believe that burner is unique in that performance level, especially in that size range. Getting that done and passing the performance test was a big milestone for ClearSign.
I think it's worth noting that in addition to that, although it's technically in the midstream sector, we did sell and start up our biggest burner ever with Devco in a midstream heater down on the US Gulf Coast. That burner was actually a boiler burner. We were just able to fit it into the midstream heater to meet the specific needs of that customer. We now have boiler burners running from our smallest size up to, I think, about 90 million BTU, which is a very large-sized boiler burner.
Matthew Selinger (Founder and Principal)
Great. We've been able to diversify within kind of our boiler burner product line itself just by multiple sizes so we can address multiple markets. Is that correct?
Jim Deller (CEO)
I think that's right. At least we've filled out the range from rather very small commercial boilers up to almost some of the biggest applications you will see.
Matthew Selinger (Founder and Principal)
Great to hear. I'm going to shift here again. We most recently heard about two product lines that we haven't heard from in a while, those being flares and then sensor. Let's take the former there. There was a recently announced flare order that we put out. If you could give a little color on that and maybe talk about that order, and then we'll talk more about what we're seeing in that sector. Because in the quote you put in that release, you were seeing kind of more activity and interest. We could dive into both of those.
Jim Deller (CEO)
We are. Generally, for anyone not familiar with what a flare is, a flare is basically a waste gas disposal device. It has a burner inside it to burn the gas to carbon dioxide and water. The flares that we sell, that burner or flame part is enclosed within a large cylindrical vessel that can typically be 30 feet tall, maybe 8 to 10 feet wide, somewhere of that size. They vary in size, but that is the general size of this equipment. The order that we have recently made a couple of announcements on was actually a flare sold by a different company. It did not work. It did not meet the emission requirements, and the customer came to us to help out. We can do that. We have the technology. The first order was for engineering.
We completed the engineering and demonstrated to the customer how we could solve this problem. He turned around and placed the fabrication order, which we are now in the process of completing. Just to put some numbers to this because it is not a standard burner, all in all, this project will be about $250,000 for ClearSign. It will enable us to take our technology, put it into somebody else's flare body, and show this customer what we can do and give them a reference in the industry.
Matthew Selinger (Founder and Principal)
That's another demonstration that our technology can provide advanced solutions.
Jim Deller (CEO)
It is a great demonstration, and its installation, actually, we can't mention the name, but the installation of a very key customer up in Northern California.
Matthew Selinger (Founder and Principal)
Let me dive into that second part of the question then. You kind of inferred a bit of a resurgence or re-interest in the sector. Can you kind of give a color of what we're seeing?
Jim Deller (CEO)
I can. We're starting to see a need for low NOx flares, which is not traditional in the industry, but it's starting to be required. With our intellectual property and with the capabilities we have, we can also develop the burner element of a flare that's capable of burning some very hard-to-burn waste gases. Typically, within the industry, the operators will be required to blend some natural gas into those waste gases to enable them to burn completely. Of course, as this is a waste disposal system, they're just buying gas to burn it, which gets to be very expensive. We can burn these gases, in some cases with minimal and often with no supplemental gas, that basically allows us to meet NOx emissions and to save the clients a lot of money. We're starting to see requests and opportunities for this part of the flaring market.
Back to the overlying theme of what we're doing to grow ClearSign and looking to the future, having that special burner technology allows us to not only sell the burner, but as it's part of a much bigger system, to sell the rest of the system and the flare structure with it. In the case of an oxidizer or thermal oxidizer that might be a horizontal vessel, it's the same premise that we can put our burner inside that vessel, but then ClearSign can sell a high-value system rather than just the burner element. From a commercial perspective, that takes a $100,000 or $200,000 burner sale and turns it into a system project that could be valued between $600,000 and $1.2 million a piece. It allows us to greatly expand our scope, leveraging our very special burner technology.
Matthew Selinger (Founder and Principal)
That's an exciting development. I mean, so you're talking basically from us potentially moving from selling just components to larger systems.
Jim Deller (CEO)
That's right. I think for everyone to be very upfront and clear, we have not sold any of these yet. We have engineered these systems. We do have proposals out for this type of technology, and we are engaged in conversations, but they are only in that negotiation phase. I do not want to mislead anyone and have anyone expecting something to come in in the next week.
Matthew Selinger (Founder and Principal)
Okay. It is an exciting opportunity. Then we recently saw that there were four ClearSign Eye sensors placed at a super major refinery. Again, another product we have not heard from in a while. Could you give a little background on this trial? I think we needed a trial, and then let's dive into the sensors.
Jim Deller (CEO)
Yeah. Trial's fair. We have talked about sensors in the past. We have not talked about them for several calls. The announcement was, in essence, a free sample to the customer, but we believe it is significant. First of all, for a refinery, even to install even free equipment is a big undertaking on their part. They have to shut down. They have to do engineering. They have to install cabling and control equipment. We have been refining the sensors over time, even though we have not been talking about it, and also talking to customers, which led to this opportunity now to install it. If I can, I would like to just fill in the gaps and explain what these sensors do for anyone not familiar with them because they are a very different product to our burner products.
In a refinery heater, the burners provide a big flameless heater. When you turn the gas on to those burners, you've got to have a small flame there to light that gas so that the flame starts. That small flame comes from a device called a pilot. To indicate to the operator that it's safe to turn the gas on, you will typically have a sensor of some type to prove or to confirm that that flame is in place. Now, this is all often taking place from a controlled system, but it's that sensor that goes on the pilot and confirms the presence of a flame that we are providing. There are well-established technologies in the industry that do this. There are some optical sensors that look up and will see the pilot flame and any flames beyond it.
They're effective, but they're not good at specifically indicating just the pilot flame. There's a very commonly used piece of equipment called a flame rod that mounts to the burner pilot. The challenge with those is that the end of the flame rod, based on its name, actually pushes into the flame. They do burn up, and they have frequent maintenance problems, which either leaves a client without any flame indication or requires very frequent maintenance, which is costly for the customers. That maintenance need is actually what drives the excitement when we've talked about our sensor to clients because the difference with our sensor is it does mount to the pilot, so it is discreet and identifies only the pilot flame, but the sensing head of the sensor is not in the flame. It sits about an inch below the flame in the core zone.
It's expected to be a much more durable and reliable piece of equipment.
Matthew Selinger (Founder and Principal)
Okay. Let's talk about the market on this, some numbers here. Jim, what is the addressable market, do you believe, in terms of these sensors? Maybe touch on maybe our sales price, and what does a typical order look like?
Jim Deller (CEO)
Yeah. This is not only a different technology. It's a different project from a commercial perspective. One thing I really like about the sensors is it is not applicable to only low NOx regions or only certain regions. These sensors are applicable to every refinery burner in the world. The scope of where this can be applied is huge. Now, to be clear, not every burner has a pilot, and certainly not every burner with a pilot has a sensor, but there is an awful lot of them do, and this makes it a very big opportunity for ClearSign. The sensors are a relatively small device. They're going to be an out-of-the-box product for us. They're all standardized. They'll sell for somewhere in the region of about $4,000 a piece.
One of the other beauties of this product line when it's rolling is we expect them to sell in multiples into a heater supply all at once. There will be ones and threes and fives, but I expect commonly these orders to roll in the 10s, 20s, up to 50 sensors per order. I think it's a different business model for us, but I think it's got to take off, but it could be a very worthwhile product line for us, which is why we've been working on it for and kept it going over the years.
Matthew Selinger (Founder and Principal)
That's very interesting. The volume off the shelf and another technology solution being sold to the same customer base or addressable customer base.
Jim Deller (CEO)
Yes. I think going to the objective of diversification and broadening ClearSign, it's a very different part of the industry. It's not tied to regulations. It's not tied to decarbonization. It will smooth out our revenue flow. I think it just gives us another separate line of business while still playing to our core customer base and core technology strengths.
Matthew Selinger (Founder and Principal)
Right. And just for clarity too, this is a ClearSign product, right? Not necessarily a Narion project. Narion's been mentioned in the past, essentially, but this is a ClearSign project.
Jim Deller (CEO)
That's correct. Yeah. The sensor is manufactured and sold as a ClearSign product.
Matthew Selinger (Founder and Principal)
Great. I'm going to shift here, Jim, and maybe address some macros. A lot of companies are talking about some of the macros out there. One, obviously, in terms of supply chain. One, a lot of companies are focused on are tariffs. Are we seeing any effect of tariffs in our current project pipeline or proposals, anything like that?
Jim Deller (CEO)
Where it shows up is in the cost of goods. ClearSign burners are built largely out of stainless steel materials. That material price is affected. We are seeing increased pricing from our vendors. We can also put and have put language in our proposals to allow us to accommodate that, to make price adjustments to the extent that we can. We are aware of it. We are working around it, but I think it is fair for everyone to be aware that we are seeing increased pricing at present that our vendors are attributing to the tariffs.
Matthew Selinger (Founder and Principal)
Okay. In wrapping up the call, are there any main takeaways you'd like to leave with us kind of in summary?
Jim Deller (CEO)
There are. I mean, we've tried to stress here and to bring out is what we're trying to do to grow the ClearSign business and set us up for expansion going forwards. Leveraging our sales channels, certainly pushing hard on the products we've got is important. I think on that note, looking for benchmarks just going forward, what I'd look for is on the inside, looking for sales leads through the Zeeco sales team. I think as an investor, I would certainly be looking out or recognize the importance of a burner sale resulting from a Zeeco lead. We're a very big first milestone on that front. I know I've said it, but I'm very excited about the M1 burners. Certainly look out for sales in the midstream industry and our growth in the midstream industry.
I would also stress, I think it's the importance of a slightly de-specced or detuned burner going out into the commodity market and expanding our scope into that much larger portion of the industry. Also, the development of that burner into boiler burner applications, potentially refinery burner applications. Right now, we've sold one and got one burner operation, but I am very excited about the potential of the M-Series burner. I think the concept of the systems projects, leveraging our flaring technology and the low BTU gas technology into either an oxidizer or a flare and the sales of, some of those bigger systems, and showing the industry that ClearSign can deliver that type of technology, what we can do. I mean, given the scope of those projects from a revenue perspective, I think that would be very significant for ClearSign. I look out for that.
We have talked about the sensors. We already have another request for quote for sensors, actually from the same refinery or the same company into a different refinery. We are also talking to another global refiner who is interested in that technology, just have not found any clue. I think there is real potential there for that ClearSign Eye sensor. We are also looking for that to roll out and scale up.
Matthew Selinger (Founder and Principal)
All right. In summary, we can look forward to sales from the diversified product line. We could look at diversifying within the product line, continuing to, is that correct? Leveraging the current sales channels we've announced, and then potentially expanding from component to larger systems.
Jim Deller (CEO)
I think that's fair. I mean, expanding the scope, expanding the markets. It's broadening ClearSign. We have a strong combustion and industry knowledge. We truly have some very talented designers and engineers here within the company. It's leveraging that core competency and expanding our business while being true to the strengths to make sure that what we deliver are truly high value and products that we can make good profit from.
Matthew Selinger (Founder and Principal)
Great to hear. That's all the questions I have prepared for this. At this point, I would like to turn it back to the operator to open up for a question and answer session. We have also had some questions sent in ahead of time, which I will curate as well. With that, operator, please open up the lines for questions, and we'll start with those.
Operator (participant)
We will now begin the question and answer session. To ask a question, you may press the star key, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.
Matthew Selinger (Founder and Principal)
Hey, operator, while we wait, I'll go ahead and read one of the questions that was sent in ahead of time, if that works.
Operator (participant)
Sure, absolutely.
Matthew Selinger (Founder and Principal)
Great. Jim, in regards to proposals, we've heard about proposals on previous calls. What is different now than, let's say, one or two years ago in terms of the proposals you're seeing and fielding?
Jim Deller (CEO)
That's a fair question. We've talked about several themes in this call today. I've tried to be upfront. Some of the product lines, especially the system products, and the reference to the engagement we have with the major refining projects, especially at the early FEED stage, I've included those to help describe work that we're doing internally within ClearSign on a strategic basis to grow our business for the future. I said during the call, I don't want to mislead anyone to expect that those orders are going to turn very quickly or those proposals will turn very quickly into orders. We do have, obviously, active sensor quotes that I believe have the potential to turn into orders. We do have the midstream orders. We do have some process burner work that has potential to turn into orders.
I have tried to be clear where I've referenced the proposals and the work we're doing as an illustration of our strategic plans and the changes we are constantly developing with the company to grow the potential of ClearSign as separate from what I call the tangible proposals that we are actively discussing as something that we expect to be able to bring into the company in the foreseeable future.
Matthew Selinger (Founder and Principal)
Great. Operator, please go ahead and poll again. I have got a couple others, but if you want to give instructions for polling, I will segue into another question.
Operator (participant)
Sure, no problem. Ladies and gentlemen, as a reminder, should you have any questions, please press the star key followed by the number one. We will pause one moment for questions.
Matthew Selinger (Founder and Principal)
Great. Jim, here's another question here. There's been some discussion about kind of less clean air initiatives and even some slowing of hydrogen projects. Do you feel at all this puts, for instance, our hydrogen burner at a market risk?
Jim Deller (CEO)
Yeah. I mean, obviously, there's been a common topic in the news, but I think it's good to be clear. The hydrogen burner and the project is titled for 100% hydrogen, and that was the driver behind the funding and the DOE awards that we have won and fund the development of this burner. The utility of the burner goes well beyond that. The refining customers have a very wide range of gases in their fuel gas, and those commonly swing up to at least 80% or higher. The development of this burner is to be capable of fuels ranging from pure natural gas up to 100% hydrogen. What that really means is this is a very fuel-flexible burner that is being designed to be robust within the industry and suitable for installation in refineries, no matter what their fuel gas blend.
I am confident that this is a very practical and useful burner going into the future, really without regard to the progress or the potential timeline of any strictly hydrogen-fueled applications.
Matthew Selinger (Founder and Principal)
Operator, please go ahead and turn over to any caller questions.
Operator (participant)
Sure. Your first caller question is from Robert Kecskes from Las Colinas Capital Management. Please go ahead.
Robert Kecskes (Analyst)
Hello. This is Robert. Can you hear me?
Jim Deller (CEO)
Hi, Robert. Yes. Good afternoon.
Robert Kecskes (Analyst)
Good afternoon. Yeah. I was going to bring up the point of the fact that when you came into the company, there was a great success in the innovation that was made. As you mentioned, it took some time to be able to develop those into an actual product. From 2021, according to your efforts, we had an innovative product developed by 2021. Now we're many years into this. The thing that I want to bring forth is that what you've explained is there's really three things that the innovation yielded. One of those was the reduced maintenance cost on the radiant tubes. The other was fuel savings, from what I've gathered, is approximately 3% or more. Of course, the much talked about reduced pollution, the reduced NOx.
The thing that I would say from a sales standpoint, the innovation yielded a lot. If we do not mention fuel savings and all we talk about is NOx, I do not think we are really—I do not think we are really giving ourselves enough credit to generate more prospects and more sales. I really think if it is not being printed in your press releases, then I have the feeling that it is not being emphasized by the people who are involved in generating sales. What I would ask this question of all that, could you give us some idea of the number of prospects, say, at the beginning of last year to now? In other words, give us an idea if there is prospect growth, if there is something we can hang our hat on.
Because in order to get these sales up to $16 million, $20 million, if you have, let's say, hypothetically, 15 prospects now, you're going to have to generate a lot more prospects to really materially increase the sales because so many of them take so long and there's things that fall through. Could you give us some idea about how many prospects we had maybe at the beginning of last year compared to where we are now at the beginning of this year?
Jim Deller (CEO)
Okay. Robert, let me take—I will answer that the best I can. Let me try and unpack some of the points you have brought up. I think addressing just your statement about efficiency and just point out we put press releases out, to be honest, mainly for the purpose of keeping investors updated with the progress of the business. Those are separate from the marketing materials and the sales presentations and the conference presentations, etc., that we make to customers in the industry. I can give just a—right, as a quick example, we talked a lot about the M1 burner, the marketing brochures for that burner. In the industry, we express efficiency as the excess air levels the burners operate at. That is the key driver, and that is what the clients recognize.
That is specifically called out on the sales brochures, but those are not the materials that are obviously discussed in the investor forum because they tend to get very technical, and the language we use is different. I appreciate your points and absolutely agree that it's very important to stress the values and the cost savings to the customers, but we do reference the efficiency, the operability, the turndown range, the speed of the burners we brought up. Those are actually all referenced, for example, on the M1 burner sales materials. There are many facets of our burners that we produce. I'll be honest, I don't have specifically the data that you talk about between last year and now.
I can tell you that the range of projects and the number of quotations and the different products that we're engaged in are significantly greater now than they have been in the past.
Robert Kecskes (Analyst)
Okay. I just want to add too to the emphasis on fuel savings because in business, if you can save money, it's a material thing. I just took a look at Devco's website and Tulsa Heaters Midstream, and both of them on their website, they mentioned that they were seeking fuel savings. It didn't take me very long to find it. I'm just saying, in the press releases that you put out to us, I've only really heard about NOx. It's been NOx reduction, NOx reduction. I really think in business, the fuel savings part of it is very, very meaningful. I think that's just—if that's what this innovation produces, then it should be something that's really emphasized.
Jim Deller (CEO)
Okay. Hey, Robert, your comments were appreciated. I note them. Thank you very much.
Matthew Selinger (Founder and Principal)
Operator, I'm going to go ahead and read another question here. There's a number of questions actually around Zeeco itself and about the Zeeco agreement. One question, Jim, is about the geography the agreement covers. And then any sort of color you can give on everybody wants to know the rollout, right? How do you kind of foresee the rollout there? You can speak in general terms.
Jim Deller (CEO)
Yes. I think the first part, our agreement with Zeeco is, first of all, it is specifically for refinery process burners, but that agreement is global. As we are marketing this as a Zeeco product and the ClearSign burner becomes a Zeeco product line, and Zeeco is a global company with manufacturing and servicing, I believe, on every continent, this gives us a global reach. Now, with that said, in areas like China, I am not ready to roll the refining process burners out in China. I do not want to expose our IP there. I do not think the Chinese will pay a price that makes sense for ClearSign. I am not saying that we are going to just push our technology out over the entire globe, but the Zeeco agreement, should we choose to, does give us that access as and when we are ready.
In terms of the rollout, this is a slow turning industry, and I hate to use that word, but we're in the phase right now of I think we're well along the way with the marketing materials. We have started to educate the Zeeco sales team. I expect that they will be talking to their customers and start to develop leads, at which point we will engage with them and join them talking to the customers. To roll that stage forward through the negotiations and completion of the projects and placing of the orders, just to put a timeline, I believe it is going to be into 2026 by the time that we start to see orders resulting from that Zeeco engagement.
Just to be fair, I don't want to give the impression and have people disappointed when it does not come in quicker because it is going to take some time just even after we engage with the customers for those customers to go through and just to go through their normal process of the engineering and the evaluation and actually placing the orders.
Matthew Selinger (Founder and Principal)
Operator, are there other questions?
Operator (participant)
There are no further questions at this time. I would like to turn the call over to CEO Jim Deller for closing remarks.
Jim Deller (CEO)
Thank you, Operator. As we end this call, I want to thank you, our investors, for your continued interest and support of ClearSign. I do also want to thank and acknowledge all of our employees. We have a small and cohesive team that has shown great dedication, flexibility, and open-mindedness as we've pushed out our business into these new areas. This has required great technical development and engineering prudence, thorough work in our sourcing and project planning by teams developing and presenting our proposals, and even the development of new accounting processes to support our customers in new ways. It is very much recognized and appreciated that all this has and continues to be done in addition to the sales, marketing, and engineering and product supply and startup and all of the operational support that make up our day-to-day operations. With that, I'd like to conclude the call.
Operator (participant)
Sorry. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. Please disconnect.