ClearSign Technologies (NASDAQ:CLIR) outlined its strategy to grow sales of low-emissions combustion equipment through partnerships with established manufacturers, expanding product offerings and a series of planned customer installations that management expects to serve as references for future orders.
In a discussion hosted by Water Tower Research, a ClearSign executive described the company as an industrial technology business focused on controlling flame structure in heaters, burners and flare systems. The company’s technology is intended to reduce nitrogen oxide, or NOx, emissions at the source, potentially allowing industrial customers to avoid installing costly downstream emissions-control equipment.
NOx Regulations Drive Addressable Market
Management emphasized that ClearSign’s business is tied to NOx regulations rather than carbon policy. The executive said NOx is a longstanding criteria pollutant associated with ground-level ozone and air toxins, with federal standards influencing local regulators’ emissions requirements.
ClearSign identified California and the Texas Gulf Coast as its principal current markets. California’s modern emissions rules have been in place for roughly five years, according to the company, while Texas regulators are rolling out tighter NOx standards for refineries and petrochemical facilities along the Gulf Coast.
The company said regulatory implementation can take five to 10 years and cited emerging emissions-related needs in Canada and parts of Europe. Management characterized the opportunity as a rolling market, with tighter requirements developing as industrial activity and hydrocarbon use expand.
ClearSign said its approach can materially reduce compliance costs compared with selective catalytic reduction, or SCR, systems. SCR systems use ammonia or urea and catalyst equipment to remove NOx from flue gas after combustion.
For one California refinery project involving two heaters, the customer estimated an SCR installation would cost approximately $50 million, ClearSign said. The company estimated its burner-based solution at just under $10 million. Management said a refinery with 40 to 50 heaters could face SCR costs of roughly $500 million across its operations, compared with an estimated ClearSign solution costing about 20% of that amount.
Zeeco Partnership Supports Asset-Light Model
ClearSign said it has structured its business around collaborative relationships with larger combustion-equipment suppliers rather than building a large internal manufacturing footprint. Its relationship with Zeeco provides access to testing, manufacturing capabilities, sales reach and market credibility, management said.
According to the company, industrial customers typically require process burners to be demonstrated at full scale before a full order is manufactured, and they require equipment to be produced in certified shops. ClearSign said Zeeco manufactures its burners and co-brands ClearSign technology, allowing Zeeco’s sales organization to offer the equipment for applications that require emissions levels below those achievable by conventional burners.
Management said the arrangement is designed to benefit both parties: Zeeco earns manufacturing profit and expands its product offering, while ClearSign gains access to an established global supplier’s manufacturing and commercial infrastructure.
Installations Seen as Critical Commercial Milestones
The company highlighted an upcoming Gulf Coast installation for a global chemical company as a key milestone. The project includes 26 burners, making it ClearSign’s largest order to date, and represents the first rollout of its flexible-fuel burner design.
Management said the project is being installed by heater engineering company Birwelco and is expected to start up in November. Because refinery customers are conservative and require confidence in equipment reliability before installing it in critical assets, ClearSign said the Gulf Coast project could become an important reference for future sales.
The company also reported momentum in midstream applications, where its burners are used in natural-gas gathering and processing operations. ClearSign said it received three midstream orders during the year, split between Tulsa Heaters Midstream and another burner manufacturer. The customers were not identified, though management described them as top-tier gas producers.
Unlike bespoke refinery burners, midstream products can be more standardized, management said. That standardization could support licensing-style arrangements in which customers manufacture burners themselves. ClearSign said such a model could reduce delivery costs for customers while allowing the company to maintain its profit and scale without proportionally increasing internal resources.
Flare Systems and Break-Even Goal
ClearSign also said it has expanded from selling burner elements for flare retrofits to supplying complete flare systems. Management said this shift has increased the potential value of individual projects from roughly $150,000 to $200,000 to approximately $750,000 or more. One flare project now being installed in California is valued at about $1.5 million, according to the company.
The company said testing from its first flare retrofit showed emissions at about 60% of the allowable limit. Management added that the same customer has two additional permits in progress based on ClearSign technology.
ClearSign said it needs annual revenue of approximately $16 million to reach break-even while maintaining its target margin. Management expects roughly $6 million of that revenue to come from midstream and flare projects, with about $10 million from process burners. It said process-burner orders for a single heater have ranged from $2.5 million to more than $3 million, meaning three to four major orders annually could support that portion of the revenue target.
Management said it believes existing cash, combined with customer advance payments that help fund projects, provides a line of sight to break-even. Near-term priorities include the Gulf Coast process-burner startup, midstream installations in the Permian Basin and California flare deployments.
About ClearSign Technologies (NASDAQ:CLIR)
ClearSign Technologies Corporation develops technologies designed to improve the emissions performance, efficiency and operational characteristics of industrial and commercial combustion systems. The company focuses primarily on reducing pollutants, including nitrogen oxides (NOx), generated by fuel-burning equipment used in applications such as process heating, power generation and other industrial operations.
Its product portfolio includes ClearSign Core, a combustion technology intended to be integrated into burners and furnaces to support lower-emission operation, and ClearSign Eye, a combustion monitoring and control technology designed to help optimize burner performance and safety.
