ClearSign Technologies Corporation Q1 FY2026 earnings call

- Product Development and Order Progress • Received the next phase order for the 32-burner California refinery project, which uses a configurable modified version of ClearSign Core Gen 2 technology adapted for a flat flame application, expanding the company's addressable market. This phase (detailed engineering, first article fabrication, and full-scale testing at Zeeco's facility) is valued at just under $0.5 million. • The 36-burner Texas refinery project, where the primary driver is increased heater throughput (in addition to NOx emissions control), uses an adapted configuration of the Gen 2 platform for opposing side-wall firing, marking another new application for the technology. • These larger 32-burner and 36-burner orders (compared to previous typical 5-8 burner orders) represent progress into larger projects with higher total revenue potential with major global refiners. • Announced a repeat M1 Series order from Tulsa Heaters Midstream, the original adopter of the M1 product. The M-Series has strong market inquiry, with multiple units already shipped and pending startup, and standard configurations enable higher operational efficiency and profitability. • Formal source testing for a new generation flare project in California is scheduled for next month, and a second full-system flare project is in fabrication for shipment later in 2026. A successful source testing will validate performance and support future sales in the flare market. • The 26-burner petrochemical plant order shipped in early 2026 is scheduled for installation in July 2026 and startup in October 2026, marking a stepping stone into the chemical market and future high-temperature applications like ethylene furnaces.

- Business Development Highlights • The recent Gen 2 process burner demonstration at Zeeco's facility was completed successfully, meeting all performance criteria including stable operation across 100% natural gas to 100% hydrogen fuel and low NOx emissions. 23 attendees including representatives from 8 large energy companies participated, and feedback from the demonstration and subsequent industry conferences has been positive. • The company maintains a healthy proposal and inquiry pipeline, with consistent customer engagement despite lumpy near-term order intake. Backlog is supported by the two large ongoing process burner orders. • Projects are structured to be self-funding: customers typically make stage payments with 50% paid upfront before fabrication, so cash is received from customers ahead of ClearSign incurring project expenditures, reducing reliance on existing cash reserves. • ClearSign maintains a low headcount to control operating costs, and management recognizes staff efforts to advance business initiatives.

Q1 2026 total company revenue was $200,000, a 50% year-over-year decrease from $400,000 in Q1 2025, driven by lower spare part deliveries. Gross profit decreased by $589,000 year-over-year, impacted by lower revenues and a $410,000 warranty accrual for potential modifications to installed equipment at a California refinery. Net loss increased by $114,000 year-over-year, partially offset by a $369,000 reduction in general and administrative expenses (driven by lower legal costs from a decommissioned special board committee). Net cash used in operations was $1.3 million in Q1 2026, compared to $1.1 million in Q1 2025. As of March 31, 2026, the company held $7.7 million in cash and cash equivalents, with 5.4 million common shares outstanding. No separate segment-level financial breakdown with revenue contribution percentages was provided in the call.

- Management maintains that average process burner pricing is approximately $100,000 per unit, which also holds as an average for the M-Series product line, with M1 pricing ranging from $80,000 to over $200,000 and lower-priced M25 units ranging from $50,000 to $200,000. - Management expects order intake and revenue to be lumpy in the near term, but forecasts significant order pickup after the October 2026 startup of the Gulf Coast petrochemical project, as potential customers will use the successful startup as validation of the technology. - No upward or downward revisions to prior long-term market growth guidance were provided; management reaffirmed confidence in the long-term addressable market expansion enabled by the configurable Gen 2 platform.

- All forward-looking statements regarding future project execution, sales growth, and market adoption are subject to inherent uncertainties, including risks of delayed project timelines, failure to meet customer performance requirements, and slower-than-expected order conversion from the existing inquiry pipeline, as detailed in the company's SEC filings. - Near-term revenue is dependent on the progression of a small number of large projects, making results lumpy and dependent on customer approval of testing and demonstration phases. - Competition from incumbent Selective Catalytic Reduction (SCR) technology remains the primary barrier to market adoption, though management believes ClearSign has clear cost and performance advantages.

Q: With up to 6 project startups expected between Q1 and Q2 2026, are these projects currently underway? / A: Preparations are underway for all upcoming startups. Flare source testing is scheduled for next month, while the large Gulf Coast burner project will have installation in July and startup in October. M-Series startups typically only require remote technical support as customers are already familiar with the product. A second large flare project will complete fabrication in Q3 for startup later in 2026. Successful completion of these startups is expected to drive future order growth from the existing proposal pipeline.

Q: Would easing of U.S. federal EPA regulations negatively impact technology adoption for ClearSign? / A: Easing of federal CO2 regulations does not affect ClearSign, which focuses on NOx emissions compliance that is largely driven by state-level regulations and global tightening of emissions rules. Global demand for lower NOx emissions remains strong, and ClearSign's partnership with global manufacturer Zeeco enables it to serve the growing international market. Long-term regulatory trends globally remain positive for the company's technology.

Q: What is the competitive landscape for new low-NOx burner technologies? / A: The main incumbent competitor is Selective Catalytic Reduction (SCR) technology, which ClearSign displaces with a lower-cost, more efficient solution. Few other new competing burner technologies have meaningful market presence at this time. ClearSign already holds strong name recognition in the SCR-level low NOx burner market, and high barriers to entry (including specialized engineering expertise and required manufacturing partnerships with established industry players) limit new competition.

Q: What is the price range for M-Series burners? / A: The $100,000 average price per burner guidance holds for the M-Series. Higher-engineering M1 units range from $80,000 to over $200,000, while lower-spec M25 units range from $50,000 to $200,000. Standardized M-Series configurations allow for efficient manufacturing and higher profitability compared to custom process burner projects.