ClearSign Technologies Corporation (CLIR) Q4 2025 Earnings Report, Transcript and Summary

Greetings. Welcome to the ClearSign Technologies Fourth Quarter and Full Year 2025 Corporate Update Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Matthew Selinger, Investor Relations. You may begin.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Fourth Quarter and Full Year 2025 Corporate Update 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 products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and the 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 ended December 31, 2025. 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. So with me on the call today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So with that, I am going to turn it over to Jim Deller. Jim?

Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and for your interest in ClearSign. Like our most recent calls, we will use a Q&A format for the session. Some of you are sending questions ahead of time, and we will assimilate those questions as we go through this call today. So for the call today, Matthew will lead a question-and-answer session. I will go through the different business units, much like our previous calls. Many of you may have seen this, but just a reminder, you can send in questions ahead of time to our Investor Relations, that is Matthew Selinger at mselinger@firmirgroup.com. So with that, Brent will go over a summary of the company financials for the fourth quarter and full year '25. Brent?

Thank you, Jim, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-K were filed last week with the SEC. And with that, I'd like to give an overview of our financial results for 2025. For the fourth quarter of 2025, the company recognized approximately $3.7 million in revenues compared to approximately $590,000 for the same period in 2024. This year-over-year increase in revenues was predominantly driven by our 26 process burner order that will be installed in the petrochemical plant of the Gulf Coast of Texas. Now for the full year perspective, we recognized approximately $5.2 million in revenues compared to approximately $3.6 million for the same period in 2024. This 44% year-over-year increase in revenues was predominantly driven by our process burner products. It is important to note that during 2025, we did recognize revenues from our other offerings, specifically midstream burners, flares, spare parts and engineering services like CFD studies. Now I'd like to turn our attention to the full year income statement. Our year-end 2025 gross profit was approximately 27%, which is down approximately 4 percentage points from 31% compared to 2024. This year-over-year decrease in gross profit was driven by our warranty accrual. In addition, our year-end 2025 net loss increased approximately $197,000 compared to the same period in 2024. This year-over-year increase was predominantly driven by nonrecurring legal fees of approximately $746,000 in 2025. Now I'd like to shift the focus to cash. Our net cash used in operations for the full year 2025 was approximately $4.7 million compared to approximately $4.4 million for the same period in 2024. This year-over-year change was predominantly driven by our change in net loss discussed earlier. As of December 31, 2025, we had approximately $9.2 million in cash and cash equivalents, with approximately 5.3 million shares of common stock outstanding. We believe our overall working capital positions us to continue executing on our long-term growth plan to scale our revenue and profits beyond our breakeven goal as we continue to build a technology company recognized for its innovative solutions. And with that, I'd like to turn the call over to Matt Selinger.

Thanks, Brent. And Jim, thank you for joining me here today. So Jim, we've had a lot of new interest in the company lately, and I see some new attendees on the call today. So can we take a moment to give a high-level overview of what ClearSign does and then maybe move into how we do it. So Jim, what in a nutshell does ClearSign do?

Sure. Yes. So we are an industrial technology company. But the technology we make is a low emissions industrial burner, right? So these are the components that control the flames in companies like all refiners and chemical plant, also boilers, midstream gas heaters, but the very large industrial flames. And this industry is driven by the need to meet the latest emissions regulation and specific to provide ultra-low NOx emissions. And we can do that by controlling the chemistry in the flame and we do through control of the flame structure. The NOx emissions are driven by the Clean Air Act, they're imposed by regulation. So these are a level that our customers are required to meet. Our advantage in the market is we enable them to do it in a much more cost-efficient manner than with the existing technology. So the levels we're talking about, the other technology to reduce emissions is called an SCR or selective catalytic reformer (sic) [ selective catalytic reduction ]. It's basically a back-end chemical plant that has to be built into a heater to remove the emissions from the flames before those gases go up the stack. With the ClearSign technology, we just don't make those emissions in the first place. To put that into perspective, one of the orders we have in-house, we were talking to the customer prior to receiving that order and their estimated costs for going with the alternative SCR solution were about a $50 million project for a conversion of one of their heaters. The -- our estimate of the ClearSign solution, their total cost, which includes our burners is in the region of $7 million to $10 million. So it's our belief just on this one project that we're saving this client in the region of $40 million. There's a very clear cost advantage to our customers in selecting this new ClearSign technology and not making emissions in the first place.

All right. So you've talked about what we do, the drivers in the market, kind of the competitive landscape of technology. Maybe describe more kind of the market and the market opportunity, Jim. Would you be able to kind of quantify what our addressable market is?

Sure. And -- right, we -- our biggest market segment is oil refining. We're also looking to develop into the petrochemical industry. But to try and put our arms around the realistic market opportunity for ClearSign, the regulations that require technology are the newest strictest areas. So for us, while there's some in Europe are predominantly for this purpose, which is think about Texas and California, is that our estimate is there's about 28,000 burners installed in refineries in California and Texas. And we did a technology feasibility study with ExxonMobil back in 2019. And as part of our conversations during that process, ExxonMobil expressed their assessment that about 15% of their burners were good targets for ClearSign technology. So if we use that 15% guideline of the 28,000 installed burners in California and Texas, that gives about 4,200 burners currently installed in refineries in California and Texas that are good applications to be retrofit with ClearSign technology to comply with modern emissions requirements. And the timing, you can expect that will be done over probably 10 years as we just trying to get our arms around or bracket the market. And then the other important piece of information is the average price for burners is about $100,000 plus more for the big ones, less the smaller ones. But for the sake of this math, we consider a ClearSign burner to sell for about $100,000 apiece. That will give you a number for the refining industry, the petrochemical industry, we would assess to be about the same size as the refining industry. And when we look at the total ClearSign product sales, we have other products as well. I'd expect our flare and thermal oxidizer products combined to make about 20% of our business. Our midstream and water products make up another 20% sort of the refining and petrochemical, that will be about 60% of the total.

Okay. Great. And again, you referred to that burner -- a typical burner price around $100,000 because we've referred to that as what Brent said in that 26 burner order, and we'll talk about some orders later that will help investors kind of quantify what a total order size may look like if you apply that dollar amount to a burner for one of our orders.

Yes, it's a good guide. I think the other piece of relevant information, if you're looking at the company, right, we are -- when we talk about the company structure and how we work, we are an asset-light company. We need a run rate of about $16 million per year or 160 process burners per year to get to breakeven, right? So that's not an extremely high number. But with that market size when you do the math, there is plenty of market there for ClearSign to develop a very profitable business.

Great. And one thing you just said there, Jim, which is a good segue to the next question, you mentioned asset-light. So you mentioned, obviously, we're an industrial technology company. And because of being asset-light allows us to capture these ballpark 30% margins, which Brent said. How does ClearSign do it? How are we structured? And how are we going to market?

Yes. So we have a unique IP and technology. And in fact, we have unique capabilities with our computer modeling. Since I joined the company in 2019, we set a strategy of leveraging that IP selling into this very industrial market with very established clients like our refining companies. Those clients require full-scale demonstration of furnace. They require the equipment to be manufactured in the shop that they have accredited with a very sophisticated quality control system, right? It takes a lot of money to develop that kind of asset. So rather than doing that, we said about leveraging our IP, but to work through collaborative partnerships with other companies that already have that infrastructure in place. And there are some really big companies in this industry. We formed a collaborative partnership with one of the really big major Zeeco in late 2019. Zeeco is a multibillion dollar [indiscernible] billion with a B company. They're based here in Tulsa. They're about 10 minutes down the road from our office. They have the largest burner test facility and manufacturing plant here. So we can demonstrate our products now in the Zeeco test facility. Our process burners get built by Zeeco. So our clients get to benefit from the approval of their manufacturing and their quality control system. So basically, we get to deliver our IP but to present it through the market with the credentials of Zeeco. For Zeeco, our capital arrangement allows them to compete in areas of the market that extend beyond the capabilities of their own technology. So this is truly a win-win relationship for both of us.

Okay. That's great. Well, then let's turn to the year-end and fourth quarter. The company ended the year-end on a high note and recorded quarterly -- record quarterly and annual revenues. Brent did mention, but what were the contributors to this?

No, I'm going to turn this over to Brent. He has all the details from the finances and can talk about more specifically.

Thank you, Jim. Thanks, Matt. Yes, the fourth quarter revenues were predominantly from our 26 burner order that would shift down to that petrochemical company in the Texas Gulf Coast. I think it's important to note that in the fourth quarter, the revenues weren't just made up of that. We also recognized revenues related to spare parts orders and engineering services. Specifically, one of the engineering services that we're citing was a customer witness test, where a subject matter expert from a petrochemical company came in and got to look at our burner and kind of run it through the test facility. I liken it to inviting a test driver to come run the race car around the racetrack and get to play with it.

And that went well?

Yes, it went well.

Great. It's good to hear. So then the 26 burner order was completed and delivered and the revenues have been booked. Is that right, Jim?

That's correct. The requirement work we had the burners are complete and packaged and ready to collect by year-end. And Zeeco really came through for us. They work long hours. But before everyone left for the holidays, we haven't combined with Zeeco had that done. So yes, we did recognize the revenue.

And when will this project start up in the field?

The burners are currently on the client site. They're waiting to be installed, which is scheduled to happen early after midyear this year. The current expectation is the start-up will occur in October.

Okay. So then let me ask you this. Do you think this will boost or help our visibility and potential pipeline?

We expect this to be very important for us. There's a number of reasons for that. I mean clearly, it's a very dominant client. It's in the heart of our biggest market down on the Texas Gulf Coast. The burners are an early version of our new Gen 2 technology, which is a great burner for us. The project was done through the Wahlco, who, I believe, the leading engineering heater revamp company here in the U.S. So there are a lot of eyes on these burners. I think generally for everyone. But we have to be very careful when we talk about customer names and the details of projects openly. Within the industry through all the conferences and the interpersonal relationships, this project is very well, right? They know the burners. There are a lot of people watching this project and talking about it. And even companies like Wahlco have been a very good reference for us because they've been through this project and see the burner development, seen them operate in the Zeeco test burners. They've already been very meaningful in talking to other clients about ClearSign burners and their experience of working with us.

Yes. And I know we mentioned in our previous calls and mentioned the name Wahlco, you can go to their website and they list the logos of their clients, and it really is a who's who of super majors, major petrochemical companies, and you can see it on their website.

Yes. And they're actually part of a very large organization themselves. So yes, they've been a very good client for us.

So then let's talk about other announced process burner orders. We've announced a 32 burner order for a major refiner and a 36 burner order for another major. We're calling it a household name. So in regard to the latter, the 36 burner order going to the Gulf Coast, how is that order progressing?

Very well. The -- so both of these orders are released in phases, which is actually very common. The first phase being engineering and the computational modeling or simulation of the burners operating in the clients. That has gone extremely well. Those results are sent to the client. So we're currently discussing moving into the testing phase of that project. The other interesting part is the installation has been split into 2 phases. And in the first half has been pulled forward so we can supply the burners into the first 2 sections of it. There's a large 4-section heaters preferred being supply the burners in the first 2 sessions, and those could be established quickly and then roll into -- we expect to complete the other 2 sections, but the first manufacturing phase actually being pulled forward, which is very good news for us.

And then so earlier, you spoke about the drivers for our technology and the use of our products. But -- and you spoke about NOx emissions being the main one. But this project is a bit of some other drivers. Is that correct?

It is. And this -- we mentioned the CFD and the competition modeling, this is where that really gets to be very valuable. So a big part of the economic driver for our client in undertaking this project is not only maintaining compliance with NOx emissions, but in this case, to improve the performance and the operation of the heater. So another thing that we can do with our technology is we have great ability to control the shape and the structure of the flame and impact the pattern or the way that the heat is transferred to the heating services inside the heater. So we can distribute the heat evenly and basically reduce hotspots that can occur if you don't do that well. What that means for the client is that we can reduce the maintenance requirements, we can reduce the frequency of prevent having to replace damaged tubes, increases the what they call the uptime of heater basically increasing their productivity and reducing their maintenance costs. So we can deliver a very real return on investment for the client in addition to or as opposed to on the emissions-based projects, we're really -- in that case, we're delivering a much more economical way of solving a problem for them. In projects like this, we can actually give them a return on investment in terms of making more.

Okay. So we're actually making the heater run better and more efficiently.

That's correct.

Now the other layer about this project you and I were discussing recently is what I'll call the design or engineering of this order. And you were telling me this is kind of a new iteration or application of burners. Could you give some more color about that?

Yes. And it makes sense. So to tie back to when we talked about the company and the industry in general and the feasibility or the assessment from ExxonMobil of 50% of burner being good application to ClearSign, that was based on the burners we had available at that time, which were upwards vertically fired round shape burners, which is the most common shape. But there are different types of heaters and different shapes and configurations. This particular case on the Gulf Coast, the burners are mounted and firing horizontally on opposed walls at the end of the square box. They're firing in towards each other. There are a number of heaters of this configuration, getting into and getting this reference and demonstrating the burners performing well in this configuration provides a very good reference for us and opens up this new type of heater for ClearSign and expanding our market. So it's actually not just showing what we can do in control of the flame shape and making the heater run better, it's also getting us a reference and an extension of our product line into the horizontal configuration.

Right. So it's demonstrating a larger applicability and expanding our addressable market?

Yes.

So then let's turn to the 32 burner order and how is this order progressing?

So this order is very similar to the first in many ways. So we received the CFD and the engineering order upfront. That has gone very well. The same as the first order, this project has also been split into 2 parts and the first part being accelerated. So we're actually going to expect to move into the testing phase quite soon. In fact, we recently received the order for some engineering to support that test. And then after that, expect to move in and be able to make the product for that first heater ahead of the schedule that we originally anticipated. So that's good news.

That's positive. And then since we're on that previous order, we're talking about designs or applications. Is this a standard application or a configuration?

These -- it's amazing how similar these projects are. This is -- it's a different configuration. This is a flat burner. So whereas the standard burners around, in fact, the horizontally fire burners we just talked about around, this burner is a long thin flame and the burner is designed to fire up against the wall inside the heater. To get the heater, the heater has a either a brick or a concrete, a high-temperature concrete wall, the burner heats the wall up, heat radiates on the wall onto the process tubes. What's especially interesting here is there are a large number of heaters and refineries of this configuration that makes this burner very relevant. What's particularly interesting in is looking forward to our product development pipeline, we're looking to get into the petrochem and specifically the ethylene manufacturing heaters. And having a flat burner that fires up against the wall of this configuration is a very common format in the ethylene furnaces. And that industry in itself is about the same size as the entire refining industry if we can get into that production. So these burners, as we're developing them for this refinery process heater are a good step in that direction. It shows our capability to produce the shape of burner. There's still work to do to get into the ethylene furnaces, but I believe this can provide a very valuable step forward as we move into and expand into that ethylene markets, are very exciting for us.

Yes. So not only are these 2 orders, large orders for us, they're both different configurations and each one that are going to be great references and expand our applicable market.

That's true. And I think at a higher level, when you look at these, I think what is showing with our very developed CFD capabilities and a very adaptable burner technology that we developed through the government SBIR program is that we have the ability to take our standard burner and to adapt that to meet the special needs of customers in these different heater applications where the burner has not been successful. So it truly platforms and showcases what we can do at ClearSign, the high level of engineers that we've been able to recruit and hire the sophisticated CFD technology that we deploy, the experience within the company, combine that with the IP that we have and what we've developed through the big SBIR project we've just completed. I think it shows those capabilities at a high level and how we can adapt this technology and readily take it and put it into these different configurations and show the success that we've been able to show.

Okay. Well, then beyond these 2 existing projects, what does the pipeline look like? Now we did mention a story on the last call about a new major refiner wanting to get quotes on 10 or so heaters. Have you seen any of these requests?

We have -- again, let's take a step back, if we can. We gave an update call in February of this year. And the main reason we did that is we've seen a shift in the type of inquiries for quotes that we've received. Basically, we started to get a lot of interest from super major household name, major refineries have rolled into the orders we've just talked about, but there was a lot of other interest from these big customers that we've been pursuing and had not had great success while our technology was just not well known or trusted within the industry. And seeing that significant shift in the market dynamic was very relevant, leading to the update we gave in February. So as part of that call, we did talk about one instance we discussed was through heater engineering company, by Wahlco, one of the major refineries and one of the key decision-makers, subject matter experts there talking to his close relationship person at Wahlco to get references of their experience working on the 26 burner project, a turn around and asked Wahlco to refer 10 projects that they have lined up in their queue to ClearSign for input going forward, right? So now to date, we've received 4 of those inquiries and been able to provide proposals for them to set expectations, right? These type of projects are usually scheduled over a long period of time. They're scheduled around our refinery turnarounds and project planning. There's a lot of work. So this is not all work that's going to come in, in the next 12 months. Some of these are scheduled out years and will continue to be. But in terms of building up our proposal backlog, this is very significant. So to date, we've quoted 4 of these. We expect more to come.

Great. And then for those -- and you're right. And referring to that last call in February, we did talk kind of a market dynamic that we're seeing, right? Larger customers, larger facilities, larger heaters, thus, we're seeing kind of larger orders, quoting larger orders.

Yes.

And then from that, could you talk about the total process burner pipeline in general?

Yes, I can. So just as a -- put some data points out of those 4 heaters for that refiner total about 73 burners, I think, is the total for those 4. In the last call, the -- we gave a general number, the backlog quoted was around 200. The -- and that included what we knew about the 10 heaters from -- because we've continued to get inquiries. We received some more, and I believe that total around 225 as we sit today. And again, those are also from household name well-recognized major refiners.

And then what sort of -- I mean we also talked about in the last call, but what sort of marketing initiatives do we have kind of on the horizon coming up? We mentioned a demonstration coming up later this month.

Yes. I mean there's obviously -- we're pushing LinkedIn and advertising campaigns. But the big event right now, we have a new burner technology we developed under the DOE SBIR grant. That development was completed last year. And the last part of that project, we're actually releasing that and demonstrating that to industry in a couple of weeks on April 23. So we have a demonstration going on at the Zeeco test facility with decision-makers and subject matter experts from major refineries and engineering companies coming in to town for that.

And how does this compare? I know we've done previous demonstrations like this, but maybe just could you give a comparison how this might compare? I know it hasn't happened yet. But how does it look like so far compared to previous demonstrations that we've done?

Yes, we can because we -- obviously, we track the responses, the invitations and new crews coming in. Much like the dynamic in the market and proposals, we've got a -- the previous demonstration, I believe the attendance was around 16 to 18 people. So far, we have just over 30 and counting people coming into this demonstration. But what's particularly important is who is in that 32. So we have key decision-makers, subject matter experts from the major refineries and major engineering companies, including customers that we're bidding to and have on the respective pipelines coming in to see. These people are taking time out of their schedule, flying to Tulsa, spend a day with us. So this is a very pleasing development for us.

Yes, I think it will be a great event. Well, then let's shift to the M series, which is our midstream focused product. Jim, like you did with process burner, would you mind kind of describing the midstream application and maybe in comparison to the process burners?

Yes. This is -- so the industry to start with, right, the refining and petrochemical is taking crude oil and processing it to an end product. The midstream, we're moving upstream. The midstream is really transportation and predominantly with this being about gas, it's also the purification and the cleaning of the gas. When it comes out the ground, it's got components in you don't want to burn, so it gets cleaned and then transported to the gas you'll see coming out in your homes and the client side. For the heaters and burners, the equipment is typically a lot more simple than the refinery heaters. It's also a lot more standardized. So that means that the burner products that we have can be designed, but once designed, they don't get customized on a job-by-job basis. The fuel is always natural gas compared to refineries where you got a whole mixture of blends. The business for that reason, can be much shorter cycle. The burners tend to get built to existing prints. It is a very low consumption of engineering and project management resources once the products have been developed. So it's a very -- well, it's based on the same technology and expertise in terms of the product line itself and how we think about it, it actually operates very differently to the process. So we can take an order to revenue much more quickly. We don't have always detailed visibility of the pipeline because once clients -- our clients heater manufacturers, once they have pricing of our burners, they will use that pricing on multiple occasions whenever they have an application for that burner, they don't come back to us for details. So there are, I'm sure many quotes out there using our equipment that we don't even know about.

And we did talk about pipeline. I know, again, we keep referring to that last call, but we did mention I think our proposal pipeline on that last call, which sits about...

It was about 50 at that time, I believe.

5-0?

Yes. And they continue to come in. And like I said, that's what we know about. I'm sure there are others out there that we don't know about at this time. I think just on that note, right, we have -- there's 2 burners. We have an M1 burner that has run now for many months. That's our first burner, that's the ultra-low burner that burn ran around 2ppm, far exceeding any requirements of these burners. But we've also developed a lower cost, what we call the M25, which is a lower spec burner for a much broader application. There's a lot of inquiries using this burner. The first of those started up 2 weeks ago, met all requirements, that burner is up and running. So that was a very pleasing development for us to actually have one up and running at actually Devco heater down in Texas.

Okay. And that's through Devco. And that was the dynamic we talked about how we sell to third-party manufacturers, companies like Devco. Have there been some developments with these third-party manufacturers?

Yes. I mean the -- in particular, Devco, watching the news. So we've mentioned Zeeco as our partner, Zeeco is a multibillion-dollar company. Zeeco actually purchased Devco, now Zeeco. So they are now very close to our office. I believe -- well, the first thing that happened was I reached out to Zeeco at the same time that Zeeco reaching out to us to confirm that the ClearSign would still be part of the Zeeco business. So we were both pursuing the same goal there. So that's very pleasing. My understanding is Zeeco has obviously taken that business over looking to grow it. They have a lot more resources than the old Devco. So I believe that's actually very good. We could be seeing a lot more Devco work in the future.

Okay. Great dynamic. So then we've covered refining, we've covered midstream. Let's get closer to the production well and talk about another product line, flares. Now this is a product line that we've seen a strong resurgence and expansion in orders and in the monetary size of orders. So can you give -- just like the other 2 product lines, Jim, could you give a brief description of our flare products?

Yes. So most people will see flares, you -- when look at more refinery, you see the large flames on very tall sticks or pipes or stretches going up in the air. There are many different types of flares, right? Ours are a much smaller flare. The typically stand 30 to 50 feet high or they're inside of that size of vessel, they are enclosed flame. And the reason they built that way is that like our other products, we have a low emissions flare. So on flares in certain regions of the company, they're also required to control their NOx emissions. We have a burner product that can do that. The earlier orders for the flare burners we took were to upgrade the burners in existing flares. So basically, our clients have purchased flares from another supplier. The flares didn't work, but they couldn't meet the emissions requirements. They came to ClearSign to replace the burner, which we did inside the existing stack. Those orders to us ran in the region of $200,000 to $250,000 per burner order. Recently, our clients have seen benefit from having us replace more and more of the equipment. So now we're typically replacing not just the burner, but replacing the fuel control system, the blower and in fact, the elements of the stack. The most recent order is a good example of this. We refer to them as system project by replacing the entire system. And these orders are coming in on the low end, $500,000 up to about $1 million apiece, the last order was right around that $1 million.

Right. And so we talked about that, that our most recent order was, I think, the customer's fifth order from us, and that customer evolved from you say, just burning -- excuse me, just ordering the burner parts, morphing into a full system. And this last full system came in around that -- closer to that latter number, the $1 million range. Is that correct?

Yes, that's right.

And then what does our prospective pipeline look like here for this product?

Yes. So I mean just with this client, we have one flare with them is due to stop at start of any time is just waiting on a component, which is not as supply somebody else's supply. We have the one that we've mentioned now that is being built. We believe or understand from them that they have 4 or 5 more flares that they will need. Now we don't know exactly the timing, but that's -- there are more flares needing low emissions coming up based on California and also, we believe also the Midwest. When we think about this technology though, we also look at it in a horizontal, which generally referred to an incinerator or thermal oxidizer. And in that format, the ability to burn a hard-to-burn waste gas has a lot of inerts is another big cost driver, right? If typically, the client will have to buy natural gas to burn this type of gas completely. With our burners, we can burn this in its raw form, don't -- without the need to buy any supplemental gas. And we have a number of projects quoted and hopefully going to come through later this year based on that. So those -- we generally group those also into that description of system projects. So both in the vertical enclosed flare format and in the horizontal incinerator or thermal oxidizer format, we're seeing a fairly healthy pipeline there. And in the latter in the thermal oxidizer format, there are a lot of renewables applications. So it's not just the refining and the wellhead fields, it's getting into other industries.

Okay. So you can look to some potential continued momentum in this product line.

Yes. Very much.

So with that being said then, Jim, we're partway into 2026. And looking forward into this year, what are the milestones that investors should be looking for?

I mean very clearly, at this time, it's all about building our backlog in the company. So getting orders in. But we're seeing significant opportunities out there now. We need to bring those orders in-house. So we've got that backlog to consistently get to a breakeven point and to stay there. So we're bringing in these large refining process orders and by building on that momentum. The start-up down on the Texas Gulf Coast is going to be a very significant reference point for us. I believe there are a lot of people watching that project. The demonstration on April 23 in just a couple of weeks to industry is going to be very significant all in [indiscernible] all about building the backlog, bringing these orders in, growing our traction with the refining industry and pushing out with new shapes and getting into more heat and showing what we can do. We're getting more and more of that work. Beyond that, the flare systems projects and thermal oxidizer projects with the size of those orders, that can be a very meaningful revenue stream for the company. So we are absolutely looking to push and maximize the references from the installations we get in that segment. And the midstream, there are a lot of quotes out there in that midstream industry just bringing those in and turning that into a routine business for us.

Okay. That's great. So that's all the prepared questions I have today. So with that, let me take a pause, and we will open it up for Q&A from analysts and investors.

[Operator Instructions] Our first question comes from Peter Gastreich with Water Tower Research.

So congratulations on your results and a great start to 2026. Just first of all, I appreciate the detail around the burner order configuration. Are you able to expand a bit more on what this will mean for your addressable market? And how would you characterize the size of the market opportunity?

Thank you, Peter. I mean the -- it's actually very large. The most pleasing part about the SBIR project was the burner platform that we've developed. It's certainly a very good straight refinery burner. But the way that the burner technology is structured, it allows us to adapt it to different shapes. So in the quarter, the 2 orders we talked about, if I had to put a number to it, it probably adds 20% to 25% to our refining coverage in just those 2 formats. But when you think larger about what we can do with that burner, I mean I truly think it opens up the door for us to get into the ethylene production, as I mentioned, which is about the size of the refining industry in itself. And I'm not sure where the boundaries are, to be honest. It's just a very flexible burner format that is very applicable, I think, and can probably open up some new markets we've not even considered yet.

Okay. Great. And so for the fourth quarter, you had a big jump in revenue with that equivalent to 70% of the full year. Meanwhile, you mentioned before that Zeeco made a substantial effort to ship 26 burners by year-end. So with your technology really being something you as potentially being disruptive, big addressable market out there, orders could expand meaningfully. How should we think about the capacity of Zeeco and the supply chain to facilitate this large growth outlook?

Yes. I mean when you put things in perspective, right, Zeeco is a multibillion-dollar company. They have global manufacturing. So I would love to be a supply problem for Zeeco. They have the biggest test facility in the world. They truly have -- up in the region, I believe, north of 15 test furnaces there. So they -- it is not a problem. Also for the other product lines, we have multiple other manufacturers in Tulsa that we can use that are used to manufacturing equipment for the combustion and the oil industry in general. That's part of the reason we moved the company here in addition to the human personnel and the expertise here. So there -- believe me, there is very adequate resources within Zeeco and then within Tulsa for the other product lines for ClearSign.

Okay. Great. I'll just ask one more question here before getting back in the queue. So it looks like your installed base here is on a solid trajectory. How should we think about the aftermarket pull-through here, maintenance, spare parts, things like that as a contributor to future revenue? Like how substantial will that be?

I mean based on what we've seen at ClearSign and also for me, based on my prior experience, it is an extremely meaningful product line in itself. It is very profitable because the -- all the engineering and the design work is done, and the clients' need is based on responsiveness. So it's very profitable and the more equipment we get out as our business grows, it will continue to grow. And it is likely that in terms of profit margin, it may well end up being close to the largest source of income for ClearSign as we look further ahead in the field and as we get more equipment out there in the market. So it is a very important product and one that we pay a special attention to now because of how important we expect it to be in the future.

[Operator Instructions] The next question comes from Amit Dayal with H.C. Wainwright.

Just with respect to sort of cadence of revenues in '26, how should we think about quarterly revenue flows this year?

That's a great question. From a quarterly perspective, Q1, I feel confident in saying that it's not going to replicate Q4 of 2025. But from an overall annual perspective, we feel confident with the revenues for 2026.

I think if I can, just in general for, we've said this before, given that our orders are very large and also long term, our revenue flows will be lumpy, right? We're not going to get consistent smooth quarters, especially not at this stage. As the business grows and we get more orders in-house, that will tend to smooth out with the volume. But at the period we're at right now with these large orders, I say it's going to fluctuate. Looking long term at the -- well, we talked a lot about the interest from our customers and the pipeline we're seeing on the proposals. As that flows through and those come in, I mean the long-term view for the company is very healthy. I chime really just to caution that I do expect things to be lumpy in the short term.

No, I appreciate that. Just wanted to see if that is still sort of in play. Not expecting anything different, but it's good to know how we should think about '26. And then just from a balance sheet perspective, are you comfortable as your orders ramp with respect to working capital needs, et cetera, to meet your growth requirements?

Yes.

Yes, we feel very confident in the cash position that we have.

I think for the new investors on the call as well, it's good to point out with our projects that they're typically self-funding. We actually bring enough money in early in the project to cover our cost for the execution of those orders. So we do not need cash. So as the large orders in our pipeline come in, we don't actually need our cash to execute those orders. We typically get that cash in, in advance of our costs or expenses.

Okay. Understood. And then just last one. With sort of this current macro situation in the Middle East, in the energy space, some of the product deployments need downtime, et cetera, for customers to put these things into play. Do you think you might face some pushouts from that perspective? I don't know, it may be too early to tell, but any thoughts on how that part of the execution...

So you're referring to the Middle East?

We lost Amit's line. I will see if I can get him back on the line for you.

Okay. I believe he was asking about the Middle East and the structure there. So those projects will be long term. We don't know what is happening there. Typically, the emissions regulations in the Middle East are not in the same level as those in the U.S. So it's unlikely that ClearSign technology will be deployed to the Middle East in the near term. No. If that increases the demand and the production in the U.S., it may well drive the need for equipment or upgrades in the U.S. There may be some benefit there for ClearSign. But to be clear at this point, I don't see ClearSign products being shipped out to the Middle East just because there's not a need for them.

And I'm going to go ahead and dovetail a question that was sent in about a similar topic. There was a question asked, Jim, if there was a great need for U.S. products being sent there, could our, in a sense, manufacturing supply be disrupted? Could we have issues getting our own burners manufactured, let's say, here locally?

Yes. I don't see that as being a concern. I mean one of these projects tend to be long. But also if we're thinking most of these will be refineries, if it's Zeeco. Zeeco is a global company. They have manufacturing around the world. In fact, they actually have a manufacturing base in Saudi Arabia there to serve the Middle East. So our products are typically manufactured in the U.S. plant. So I don't see that as a concern at this time.

And I'll give another follow-up question, if I could, Jim, from an e-mail that came in. There's been also very news kind of relevant. There's been a lot of discussion of potentially the first new refinery being built in Texas. Are we seeing or hearing anything about that?

We obviously see the news, and there's been a couple of release out this week. Within the industry, we're not hearing much actual factual news. So we're watching it closely. I'm -- I think at this point, I'll just say we are paying attention to it. I would not put too much at stake at this time. As things develop, if they do, and they've mentioned there being a hydrogen fuel to that site. If that does materialize, it could be very relevant for ClearSign. But at this point, we are watching 4 developments, let me say, there's -- we've not seen any solid details about that yet.

Okay. Great. Jim, I'm seeing no more questions. So with that, I think we'll go and wrap up the call. I will pass it back over to you.

Great. Thank you, Matthew, and thank you, everyone, for joining us today and for your interest in ClearSign and especially for taking the time to listen to our call. We will be presenting at Water Tower Research Insights Conference next week on April 15. and the company can be found on their website, watertowerresearch.com. We look forward to updating you regarding our developments and speaking with you on our Q1 2026 call, which will occur in May. In the meantime, please keep checking in for developments on our website. And for more behind-the-scenes updates, please follow us on LinkedIn. With that, thank you very much, and thank you, operator.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.