Good afternoon, everyone. Great to have you with us. Thanks for joining this WTR Insights Conference session with ClearSign Technologies. I'm Peter Gastreich, Managing Director for energy transition and sustainable investing here at Water Tower Research, and I'll be guiding today's conversation. We're very excited to be speaking with Dr. Jim Deller, CEO of ClearSign Technologies. Jim, welcome, and thank you so much for joining us today. Hey, Peter, I appreciate the opportunity. It's good to talk to you again. Okay. Thank you very much. Before we dive in, just a quick note, you can find ClearSign Technologies's safe harbor statements on the investor tab on their website. As a reminder, this fireside chat cannot be reproduced or transcribed without written permission from Water Tower Research. Feel free to send your questions in through the chat. We'll work them into the discussion or cover them in our management series report later. If you'd like to request a meeting with ClearSign, simply indicate that on the conference portal. With that, let's get started. Jim, for investors who may be new to ClearSign Technologies, could you walk us through what the company does, and the problem that you're solving for your industrial customers? Certainly. At a high level at ClearSign, we describe ourselves as an industrial technology company. We sell low emissions combustion equipment, these are namely burners at technology level margins. Our customers are big names you would recognize, typically the larger oil refiners, petrochemical plants, also users of industrial boilers and mist eliminators and flares. We are an asset-light company. We have a series of collaborative relationships with some of the major companies in the industry. That allows us to deliver our product to the customers using their infrastructure while remaining asset light. For example, one of our major partners is a company called Zeeco, Inc. They're here in Tulsa, just 15 minutes down the road from us. This relationship allows us to use their full-scale industrial demonstration facility. They manufacture our products, so we can deliver our equipment to the refiners, providing them with all of the credentials, the quality control programs, the demonstration capabilities they expect, while keeping ClearSign asset light and leveraging our IP. We do have a strong IP portfolio, and we continue to develop products and expand the capabilities of the products that we have. We are making sales, we are generating revenue, and one of the things, very importantly, towards the end of last year, we started to see significant traction with the major oil refineries. We have a large order shipping down to the Gulf Coast of Texas that was completed at the end of last year. Also around that timeframe, we picked up two new orders with major oil refineries that we are now in the early stages of progressing. Since that time, our quote backlog with these major companies has significantly increased. I think it's a very exciting time for ClearSign. Okay, thanks, Jim. That's a great overview. I think it's important for investors to understand that ClearSign's demand driver is NOx regulation, right? It's not carbon policy. On that note, how would you characterize the regulatory landscape right now and how sustainable is this compliance cycle as a long-term growth driver for ClearSign? Yeah. I point out that the toxic emissions, and particularly NOx, are the major driver for our products. We do have others that I can touch on, but distinguish the NOx emissions from decarbonization and the more recent policies driving combustion. NOx, the toxic emission, and along with ozone, that was regulated back from the 1970s, back when the Clean Air Act and the Environmental Protection Act was put in place. It has continued to be regulated since then. It's highly toxic. There has never been a question about does this need to be regulated? In fact, since that time, the allowable concentration of NOx and ozone at ground level has only been increased. As the amount of refining and industrial usage and cars on the road increases, the contribution to that ground level toxic only increases. There's an ongoing need to make the combustion equipment cleaner and cleaner just to maintain the status quo of those toxic emission levels. Now, as you mentioned, the CO2 and decarbonization, one of the components of that is potentially adding hydrogen into fuel gas. One feature of that is as you add hydrogen, it actually increases the temperature of the flames, which is a very important driver of forming NOx emissions. There is some interplay there as those initiatives are pushed, or as refiners look to be capable of burning hydrogen in the future, that in itself would increase the NOx emissions, causing a need for more sophisticated combustion equipment just to maintain compliance with their existing permits. We see it as a very significant driver. There's an increasing need to tighten, and right now it's concentrated in our key markets, California and Texas, but we see that spreading. We also have an application in Europe, so the need for low NOx equipment, we see that continuing to grow both domestically but also into international markets. You did touch a bit on how ClearSign core technology, it takes a fundamentally different approach to that NOx reduction when compared to the conventional systems. Maybe in plain terms for our generalist investor audience. What is it that ClearSign does differently? Ultimately, what gives your customers such a significant cost advantage? Yeah. When we talk emissions reduction, we're right at the cutting edge of low NOx technology. There's a lot of other low NOx burners in the market. To get down to the latest regulatory requirements we're seeing now in California and down on the Gulf Coast of Texas, the traditional equipment that our customers have to use is a device called an SCR or a selective catalytic reduction device. That is basically a chemical plant. It's made up of catalyst. There's an injection grid of ammonia or urea that has to be built into the back end of our client's heater. What this does is it actually forces a chemical reaction that takes the toxic NOx pollution and turns it back into harmless nitrogen and water. Basically, it's a back-end cleanup system. It's a very expensive, elaborate piece of equipment that has to be built into the back end of our clients' heaters. With the ClearSign burners, we're at the front end. We basically don't make that NOx in the first place. It's a much more efficient way of reducing NOx. To put some numbers around that, one of the orders that we picked up late last year, we had a chance to talk to the customer about their estimating process. Their estimate for the NOx control on the project that we ended up winning was an SCR cost of about $50 million. Our estimate of our client's cost for the ClearSign solution that includes the purchase of our equipment, but also the installation and the engineering and everything else they have to do, is in the region of $7 million-$10 million. I think just for that one project, we are enabling our client to save about $40 million on doing what they've got to do to meet the regulatory requirements for that particular heater. There's a very significant financial motivation for customers to go with this new clean burner technology that ClearSign provides. You've now completed DOE testing of the Gen 2 flexible fuel burner, which, as you mentioned before, this handles everything from natural gas to pure hydrogen. What does this unlock in terms of new markets and customer types? How does it widen ClearSign's competitive moat versus those incumbent solutions? Yeah. Thank you, Peter. This is a very significant development for ClearSign. That project was funded by the SBIR DOE program, and the initial concept there was looking at the potential to use hydrogen as a fuel, but our clients needed a burner that met their latest NOx emission requirements today and was also capable of burning the new fuel of the future just to enable that transition. What that meant for ClearSign was we had some funding to develop a burner that was truly fuel flexible. Why that's important is that refineries and petrochemical plant use waste gases that come off their production and put that back into their fuel system. Those gases are not natural gas. It's a complete mix that contains up to 80+% hydrogen in cases and all other versions of hydrocarbon. We needed a burner that would just burn all of those fuel gases without question and maintain the latest NOx requirements. That's what we've been able to achieve with this new burner. Beyond that, our requirements for ClearSign was our products have to be easy to install, so they fit back into the existing holes. They have to run like the burner the operator is used to. This burner has achieved that. We have an extremely robust burner that now operates across all of the fuel gases that you're going to see on a refinery or a petrochemical plant. For ClearSign, we've come up with a product that meets really all of the latest NOx regulations and conceivably as far as they would go, burning all fuels. This burner is extremely robust. What's exciting for ClearSign is it's also a very flexible burner platform, and it allows us to take the platform we've developed but convert it into different shapes and different configurations of burners so that we can address not just the standard heaters on refineries, but also some of the different processes. For example, square box, they're firing in from the wall. We've come up with a flat flame version of this burner where it runs along the wall. It actually expands the market for ClearSign by enabling us to put our latest burner technology into a whole range of different heater configurations. I believe a lot of the recent interest we've seen in ClearSign and the increase in inquiries for proposals and the projects we've been asked to give input into, especially from the major oil companies, is driven by what we've been able to demonstrate in this new burner. We actually have the order we shipped right at the end of last year, while it's not the final result of that SBIR DOE program, was a first version of that technology, and that project was executed through one of, or maybe the premier heater modification engineering company here in the United States. This is a very open network internally within the industry. There's a lot of communication between those engineers and the refinery subject matter experts, so news of that project and how that burner performed in testing even up to this point is very well disseminated within the industry. We know that engineering company has actually provided references for ClearSign, which has led to some of those inquiries that we saw coming in towards the end of last year. Let's talk about the Zeeco partnership, your combustion equipment manufacturing partner. That's obviously a very important part of the ClearSign story. Could you share with investors sort of how that relationship has evolved and why it's so central to your asset-light business model? Yes. It's fundamental to ClearSign. I took over this role back early 2019, and at that point, we set a strategy. Our board realized that we not only have to have a product that meets the needs of our customer and be easy to use, but we have to be able to deliver that product to our customer, meeting the needs of what they expect and require as part of a new technology delivery. In the burner industry, you're required to demonstrate a new oil refinery burner at full scale with all the performance measurements and the turnaround, and showing it doing everything it needs to do before you even go into the final manufacturing phase. You have to have access to a series of test burners that allow you to demonstrate these burners at full scale. You also have to manufacture the burners in shops that have the quality assurance requirements and the procurement requirements that meet the needs of the major refiners. That infrastructure is extremely expensive to buy and put in place. It wasn't feasible for ClearSign when we're trying to leverage our technology and stay asset-light to invest in that kind of infrastructure ourselves. We set about a strategy of leveraging our technology, but forming a partnership with companies that already have all that infrastructure in place. What that does for them is, by having access to our technology, it allows them to compete for projects that have requirements that extend beyond what their own equipment can do. We allow them to get into new markets, and for ClearSign, it gives it access to their infrastructure, to their test facility, and then they get to manufacture our product. We get to benefit from their position on the approved vendor lists of our clients, like the oil refiners, which is extremely important to sell into this industry. We actually moved ClearSign into Tulsa because this is where our partners are. It's also where the experts in this field are. Zeeco's test facility now is about 15 minutes down the road from our ClearSign office, so we have a very frequent interaction with Zeeco as we execute our projects and go through testing. Early last year, we made the jump with Zeeco that they are now co-branding our process burner product. While we continue to sell it as ClearSign, it's co-branded as a Zeeco product, and Zeeco are actually selling and marketing ClearSign burner technology as a Zeeco product through their own huge global sales team and on their website. That was a very big development in the relationship between ClearSign and Zeeco. You've talked about, both in your results briefing recently, as well as your February investor briefing, you talk about the importance of operating reference points in winning large orders from those industrial buyers. With that 26-burner Gulf Coast installation approaching startup, and the two earlier California installations that are already used by regulators to reset the best available control technology standards, how do you expect these reference points to change the conversation with those prospective customers? They are key. Refining is a very high tech, very complex plant, so as you can imagine, the engineers that look after those refineries are very cautious and careful as they adopt a new technology to put into that plant. Even though we're delivering a very substantial cost saving, at the end of the day, they have to be confident that the equipment is going to work, and to do that reference list is very important, and we have other piece of equipment operational as well. The project going down to the Gulf Coast is with a major chemical plant down in the heart of our largest market, which is the Texas Gulf Coast. It, as I said earlier, was executed through the leading engineering company. They and the client were very involved in that testing, seeing those burners perform as we went through that testing process. There are a lot of people watching that project, and it's also the first iteration of our new burner technology. I personally believe that a lot of the inquiries that we're working on and projects that we're discussing with our customers are waiting for that startup before they will finally get triggered. Now, these projects run on our lead times. That's not necessarily delaying the projects, but that is going to be, I think, a final box for our clients to check before saying, "Yes, this is the right way to go. We're saving a lot of money. The technology is proven. We've got those reference points." I think that Gulf Coast startup in particular is going to be a very important data point for ClearSign. The BACT findings are important. I think they establish the credentials of our technology, and to get that designation, you not only have to get the best control technology and the lowest emissions, you also have to have equipment operating for almost up to a year, which they check to show that it's got the durability and that the equipment's reliable. So it is a very good data point for ClearSign, and that reference actually rolls up to a national level. I think investors are going to be very focused on your path to breakeven. You've recently defined that ClearSign sets that level of breakeven at around 160 process burners per year. How should we be thinking about that path from where we are today to hitting that kind of a run rate? Beyond those new burner sales, you also have that meaningful potential with the aftermarket revenue stream, maintenance, spare parts, for example, as a contributor. How should we be thinking about these things together? Yeah. To make that 160 burner number meaningful, a ClearSign burner will sell for, on average, about $100,000. It can be high, it can be low, but that's a good average. About $16 million in revenue will get ClearSign to breakeven. Just for reference to see how this builds up, the order shipping down to the Gulf Coast includes 26 burners. The two orders that I've referenced that we started at the end of last year, one was for 32 burners, one was for 36. As we work with these major oil companies, the heaters are bigger heaters have more burners in. We start bringing in orders of that size, that 160 burners per year run rate suddenly gets much more realizable. We're giving guidance on the size of the opportunities we're talking about. It's in the 200-300 range, and even since the start of this year, we've added about 25 burners to that. We have a lot of inquiries out there that can easily make up that run rate. That will get us to breakeven. In addition, we have products we haven't talked about here, like our flare systems that will sell for about $1 million a piece. Those are the stepping stones that will get us up to that breakeven point. Of course, our first goal is to get there, but our goal is to go well beyond that. You asked about the aftermarket, and this is often overlooked. The aftermarket is an extremely important part of the combustion business, right? As you get more equipment out in the field, that equipment needs servicing and that equipment needs spare parts. The more equipment that you get out, the more spare parts that you will continue to supply to that equipment. As the refineries go through their turnaround cycles, it's quite common to look over the equipment and basically to work out what they need, just like changing the oil and the tires on a car, and then to supply those aftermarket parts. From a business perspective, the beauty of the aftermarket business is all that equipment is already pre-designed. It is a very high-margin business, and you can execute it with minimal resources. As we get more equipment out, that will continue to grow and to continue to be a more and more meaningful income and profit stream for ClearSign. To put that, even now at these very early stages, our aftermarket revenue is running about 10% of our total as a guide, just looking at the numbers from last year. That will only continue to grow as we get more and more equipment out in the field. Because of the importance of the aftermarket business, as the business grows, we actually pay a lot of attention to how we track parts, how our aftermarket agreements are set up at this time, just knowing how important that is going to be in the future. I guess that margin on the aftermarket revenue stream, if it's larger, it should have kind of an outsized contribution, relative to revenue. Is that right? Extremely, yes. Yeah, that's very much the case. Okay, great. Well, it's April now, which means that we're getting close to your demonstration day, and I know that you and the team at ClearSign have been very excited about what's to come. You've got senior decision-makers from multiple super majors that are committed to attend that event at Zeeco's facility this month. Maybe just to share for our investors audience, what will the attendees see at this event? What are you hoping to prove? And what is this kind of success for you? How do you define success at this event? Yeah. As with a lot of sales and marketing activities, there's not a binary, you don't win the order at the event, and especially in this industry, that is a longer process. With this being new technology, what you can do in a test facility is you can drive the equipment in a way that you would never drive it inside a refinery. Just like taking a car out, if you put it on the track, you can really put it through its paces somewhere you would never do it if you're driving it on the road. With the key engineers and decision-makers from the refinery coming in, we can show the burner rapidly switching through a whole range of different fuel gases. We can ramp it up and down far more quickly than it would do on a refinery, and basically do things to it that demonstrate its robustness and why they should be confident in this technology. It really goes hand in hand. They'll get the reference from users and from installation saying, "Yes, we're using the equipment. It's reliable, it is durable, it's doing everything, and it was delivered on time, and the experience was good." Showing them it operating in a test furnace like this, it shows the capabilities of the burner. We can go beyond the technical listed capabilities and just show them how effective this equipment is. We have north of 30 people registered to come in, including decision-makers, subject matter experts from the major refineries, and the engineering companies that look after them. Our main goal is we need them to be confident that this new ClearSign burner is a very viable solution for their emissions upgrade projects that they are now planning and having to address as the tighter regulations either roll out or in the state of California, as those due dates start to get on the horizon to the point that they need to be taking action. We need them to be confident and to understand that this burner truly does what we say it will do, and that as they're the people who are actually going to be making that recommendation in the company, give them a first-hand experience and a chance to see the burner put through its paces. So far I'm encouraged. We have the demonstration is set for one day. We already have people coming in wanting to spend a bit of extra time with the burner, both on the day before and the day after that demonstration. We are seeing a lot of interest in that demonstration. Okay, that's great. We'll look forward to that later in April. If we want to think about looking beyond the demonstration day and say, over the next several quarters, what are the key milestones that you think investors should be focusing on at ClearSign? Our focus this year is bringing in orders, right? Our revenue is lumpy. It has been because we have very large orders, but we're in the early stages of bringing those in. We have a lot of new inquiries and interest from the refineries. This year, getting that work in-house into our project backlog really is key. That will allow us to execute it over time and then to generate the revenue which will lead us up to break even and beyond. Sales are key. The startup on the Texas Gulf Coast for a data point, that event is probably singularly the most important single event on our calendar at this time. The demonstration in two weeks is also going to be very significant. We have a lot of focus on that demonstration right now and the clients coming in and making sure that that and the presentations and everything that go with it go smoothly. We've talked a lot about the process burners here. Beyond that, we have a flare product line with some significant orders, one is actually being built right now. That's about a $1 million order going out. That's the fifth order we've received from this client, and we believe that they have more to come. Follow our successful startups in the flare line, bringing in orders from them, and then our midstream business. We have a lot of inquiries out for a standardized burner that goes into midstream heaters. We're looking to convert more of those into the ClearSign pipeline. Well, Jim, we are edging up close on our time here. Is there anything that we've missed today, or would you like to provide any concluding remarks? Peter, thank you. It's been great to talk to you. I really appreciate the opportunity. One thing I'd just like to pass on to anyone really new to ClearSign, obviously we have a lot of information with Water Tower Research. We do provide frequent updates on the ClearSign website, and then for more behind-the-scenes and updated information, we're actually very active on LinkedIn. I'd encourage anyone to follow us on LinkedIn for more day-to-day behind-the-scenes updates. With that, Peter, thank you very much. It's been great to talk to you again. Well, thank you very much, Jim. On behalf of Water Tower Research, thank you. Also thanks to our participating audience. Jim, we really look forward to having you back again very soon here. Yeah, fantastic. I look forward to it. Thank you, Peter. Additional materials related to ClearSign Technologies can be found at www.watertowerresearch.com. Investors with remaining questions or those wishing to request a meeting with management are encouraged to communicate their interest via the conference portal. That wraps up the second and final day of the WTR Insights Conference. We hope you'll join us again for future events at Water Tower Research. Thank you.