ClearSign Technologies Corp (CLIR)·Q3 2024 Earnings Summary

Executive Summary

• Record quarterly revenue of $1.859MM, the largest in company history, driven by shipment of 20 process burners to a California refinery; net loss improved to $(1.155)MM with diluted EPS of $(0.02) . Management emphasized structural margin improvement and the largest 12-month revenue period to date .
• Commercial momentum across process burners: 26-burner engineering order (Birwelco, Texas Gulf Coast), repeat orders at Kern Energy, and Zeeco planning joint co-branding/promotion of ClearSign’s process burners .
• Boiler burner validation: California GET program reported material fuel/electricity savings and sub‑2.5 ppm NOx capability for ClearSign’s Rogue burner; large 1,200 hp California installation achieved measurements under guarantee ahead of formal source test .
• Estimates comparison unavailable: S&P Global consensus data could not be retrieved today; the company does not provide formal guidance . As catalysts, management highlighted Zeeco co-branding, hydrogen-capable burner progress, regulatory tailwinds in TX/CO, and a growing pipeline .

What Went Well and What Went Wrong

What Went Well

• Record quarterly revenue from shipment of 20 burners to a Los Angeles refinery; management views the two large heaters (8 and 12 burners) as significant future sales references once operational .
• Third‑party validation: California GET study concluded ClearSign’s boiler burner produces ultra‑low NOx, with material fuel/electricity savings; CEO: “a very powerful selling proposition… $80,000 per year savings” for a 500‑hp boiler .
• Strategic channel expansion: Zeeco to co-brand and globally promote ClearSign’s process burner line; CEO called it “a huge development… biggest step forward for ClearSign for a long time” .

What Went Wrong

• China operations suspended; one‑time accrual of $394k recorded in Q3, elevating G&A and impacting quarterly loss .
• Revenue lumpiness persists; Q2 revenue was $45k, highlighting milestone-driven recognition and shipment timing variability .
• LA refinery startup timing: client clarified delay to mid‑2025 (not ClearSign-related), pushing operational reference timing out and potentially affecting near-term narrative momentum .

Financial Results

Notes:

• Year-to-date gross margin increased ~11% YoY (22% → 33%); CFO quantified ~$340k profit addition, partly offset by China suspension accrual .
• Cash and equivalents at quarter-end: $14.486MM .

Segment breakdown: The company does not report separate segments; Q3 revenue predominately process burners shipment to a California refinery customer .

KPIs:

• Net cash used in operations (quarter): ~$1.4MM; ending cash ~$14.5MM .
• Shares outstanding (period-end): 50,234,407 .
• Contract liabilities decreased to $174k reflecting revenue recognition on shipments .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This was definitely a record quarter for us by a long margin… revenue flows are significantly increasing… increase in revenue and margin, I truly believe the business is going in the right direction.” — CEO Jim Deller .
• “Zeeco… we were able to meet with them and discuss a joint branding… Zeeco will… promote ClearSign’s process burner technology under their own name… This is a huge development for us.” — CEO .
• “Third‑party study found… 4% less energy… ~$80,000 per year savings for a mid‑sized 500‑hp boiler in California… capable of sub‑2.5 ppm NOx vs. 6 ppm baseline.” — CEO on GET report .
• “Ending cash… approximately $14.5 million… net cash used in operations… approximately $1.4 million.” — CFO Brent Hinds .
• “We filed… suspending our operations in China… one‑time costs… mainly related to employee termination payments.” — CEO ; accrual estimate $394k recorded .

Q&A Highlights

• Margins direction: Management expects further margin improvement with volume and mix .
• Narion sensors: Affiliated company advancing ClearSign Eye sensor applications (aerospace and flare sensing), targeting demos and eventual commercialization; self-funded development .
• Hiring and resource allocation: Two engineers added to free senior engineers for customer-facing/business development; near-term headcount stable, positions tied to project execution .
• Pipeline maturation: “Grown substantially… multiple inquiries a week… larger orders,” including Birwelco-led Texas project; LNG export interest supportive of horizontal process heater demand .
• Zeeco relationship: Next step is dual branding and global sales team promotion; management characterizes as a major strategic advancement .

Estimates Context

• S&P Global consensus for Q3 2024 EPS and revenue was unavailable today due to system limits; the company does not provide formal financial guidance . As such, an estimates comparison is omitted. Any future revisions likely center on demonstrated demand momentum (process burners, boiler validation) balanced by revenue lumpiness and China exit charges .

Key Takeaways for Investors

• Execution inflection: Record revenue of $1.859MM with net loss narrowing to $(1.155)MM and diluted EPS $(0.02) underscores scaling shipments and improving economics . Near-term trading: positive print with validation catalysts; watch follow-through orders and shipment cadence.
• Channel leverage: Zeeco co-branding/global promotion materially expands reach; could accelerate order flow in 2025+ as references come online in LA and Texas . Medium-term thesis: partner-led distribution drives asset‑light growth.
• Boiler burner proof points: GET study and 1,200 hp CA install under guarantee support differentiated NOx/efficiency narrative; expect enhanced pricing power and faster sales cycles in regulated regions (CA/TX/CO) .
• Hydrogen readiness: Progress on 100% H2 flexible-fuel burner enables customers to install now and transition later, de‑risking decarbonization roadmaps; potential competitive moat as hydrogen adoption advances .
• Revenue lumpiness persists: Q2 revenue ($45k) vs Q3 ($1.859MM) highlights milestone/shipment-driven recognition; consider staged position sizing and event-driven trading around shipment/test milestones .
• China exit cleans up focus: $394k one‑time accrual impacts Q3 G&A; reduces distraction and concentrates resources on North America where regulatory tailwinds and partner network are strongest .
• Liquidity and runway: $14.486MM cash; net operating cash outflow ~$1.4MM in quarter offers >12 months visibility per management; monitor warrant exercises, Nasdaq bid price compliance, and potential reverse split considerations .

Appendix: Other Q3 2024 Press Releases and Prior Quarters

• Exotherm orders for power generation customers in Oklahoma and Missouri expand footprint and validate horizontal process heater line .
• Birwelco Texas petrochemical multi-heater project initial engineering order (26 burners) marks largest process burner order to date; delivery phased into 2H 2025 .
• Q2 2024: Revenue $0.045MM; net loss $(1.872)MM; staged demonstrations (Zeeco) and GET program event set table for Q3 record revenue .
• Q1 2024: Revenue $1.1MM; consecutive >$1MM quarterly revenues began, with strong process burner momentum at Kern Energy .