ClearSign Technologies (CLIR): The CTO and VP of Burners Inside the Engineering Platform Built to Scale의 전체 녹취록

the NOx down. 00:04:28.560 --> 00:04:37.839 So we're we're attacking not only what's referred to as thermal NOx, but we're also attacking the NOx where it's formed in the flames uh roots by cooling off those temperatures. 00:04:39.519 --> 00:04:52.399 And then you know, following up on that, Jeff, the emissions compliance uh is the entry point here, uh, but clear sign delivering improved customer profitability is really the the key, it looks like. 00:04:52.480 --> 00:04:56.560 So, you know, how can burner design influence a heater's throughput, yield, and uptime? 00:04:56.639 --> 00:05:02.720 And I'd love to get your perspective on you know how these factors can change the conversation with your customers. 00:05:03.360 --> 00:05:03.839 Sure. 00:05:04.000 --> 00:05:11.519 Um from a uh the hard mechanical part, um, our equipment uh we tend to engineer to order. 00:05:11.600 --> 00:05:14.639 So it goes what was referred to in the industry as hole for hole. 00:05:14.879 --> 00:05:31.680 And really all that means is that they can shut the heater down, pull the existing equipment, ours bolts back in place, minimal uh modifications in downtime, so they can do a burner change out inside of a week, whereas if they shut down to retrofit with an SCR, that you know could be a much more extended period of time. 00:05:32.000 --> 00:05:38.160 So um that reduced downtime leads to a lot, you know, uh less lost profit, if you will. 00:05:38.319 --> 00:05:48.480 I'd I'd like Matt actually to touch on the finer points of the uh how the you know efficiency improvements and um throughput can be increased uh through his background with CFD. 00:05:48.720 --> 00:05:50.720 Yeah, sure, absolutely, Jeff. 00:05:50.879 --> 00:06:04.319 The you know, we can use CFD or computational fluid dynamics to model our equipment specifically and the customers' uh heaters and furnaces, which lets us tailor our equipment to work with theirs. 00:06:04.639 --> 00:06:25.839 But uh, you know, zooming out a little bit, there are certain processes in general, such as olefin's production, um, hydrogen production, and even the crude furnace in uh refinery, that what matters is not just that you're delivering the heat through our burners, but how you deliver the heat can have a direct impact on the customer's yield and their uptime. 00:06:26.079 --> 00:06:41.360 So by tailoring the burners to work with the customer system or their process, we can actually deliver demonstrable increases and uh in yield and uptime and reduce coking, for example, or or do uh increase product production. 00:06:42.480 --> 00:06:43.600 And uh thanks for that, Matt. 00:06:43.680 --> 00:06:50.959 And on CFD, could you elaborate a little bit more on exactly what the CFD is and how has that evolved over your career? 00:06:51.040 --> 00:06:57.759 Uh and how is uh you know ClearSign using that, uh, you know, using the CFD different from uh others in the industry? 00:06:58.160 --> 00:06:58.800 Sure, Peter. 00:06:58.879 --> 00:07:07.439 Uh computational fluid dynamics or CFD that we've been referring to, it's a method to solve with rigor uh chemistry and physics on computers. 00:07:07.680 --> 00:07:14.480 So over my 27 years of experience in doing this, it's evolved from essentially a cool toy into a must-have for many fields. 00:07:14.560 --> 00:07:17.839 And this ranges from things like F1 cars to airplane design. 00:07:18.000 --> 00:07:20.000 And of course, we're using it for combustion. 00:07:20.160 --> 00:07:27.199 Uh Clearson uses CFD in a different way from most of the others in our industry uh from how they've approached it. 00:07:27.279 --> 00:07:37.519 Uh, we actually demanded and have achieved through careful selection of tools and a honing of the sub-models results that are predictive with an engineering accuracy rather than just indicative. 00:07:37.759 --> 00:07:50.240 Uh, because of this, we can now predict KPIs such as NOx performance, heater efficiency, and flare destruction efficiency that tie directly to our customer values to the extent that in many cases we don't need physical testing. 00:07:50.560 --> 00:07:56.240 Strategically, using CFD for us, it ties into our asset light method of operation. 00:07:56.399 --> 00:08:03.839 It allows for further optimization of the product, and in the near future, it'll help enable AI forward design for our products. 00:08:04.959 --> 00:08:15.279 And then uh, you know, continuing uh with the you know physical testing, how should we think about the you know computer modeling and physical testing working together at ClearSign, for example? 00:08:15.439 --> 00:08:18.079 You know, when does a design need full-scale testing? 00:08:18.160 --> 00:08:22.000 Uh, and when can it go straight from the computer, you know, out to the field? 00:08:23.040 --> 00:08:23.360 Sure. 00:08:23.519 --> 00:08:31.519 I'd I'd like to compliment Matt first um uh getting ClearSign established with our own CFD processes and our team. 00:08:31.680 --> 00:08:37.039 Uh it's been a huge uh bonus for us to to uh cracking doors open. 00:08:37.360 --> 00:08:51.279 Um I'd also like to point out when when Matt was talking about the uh you know CFD, one of the it one of the nice things about CFD, um if you go back in time, if I had a mole of fuel and a mole of air, it burned in the model. 00:08:51.360 --> 00:08:55.519 Uh so it was very difficult to determine flame front, which is really important to us. 00:08:55.679 --> 00:09:12.960 Um with the modeling Matt does, um not only can he determine the proper uh stabilization point of the flame, but he also gives insights to us um on startup because they actually start the burner up in CFD the same way uh we would try to do so in the field. 00:09:13.200 --> 00:09:33.279 And it's really been uh critical because you in prior prior years, prior decades, CFD could not determine the flame front, nor could it determine um stability, and the insights Matt gains from CFD actually leads us to be able to uh uh

rapid prototype products to field. 00:09:33.600 --> 00:09:39.360 So we've got equipment like our M series burner, um, went straight from CFD to the field, started up. 00:09:39.519 --> 00:09:43.039 Customers are very complimentary on how easily it is to start. 00:09:43.279 --> 00:09:49.600 Um we have a flare technology that's gone straight from CFD to field and past emissions testing. 00:09:49.759 --> 00:09:54.000 So those are huge steps because it saves us a lot of money and testing time. 00:09:54.320 --> 00:10:00.320 Where physical testing comes into play is on the process burner side of our business. 00:10:00.480 --> 00:10:10.639 Uh our clients are um you know oil majors, um, they're very conservative and they like to lay hands on things and see it, uh, even though the CFD does give you a wealth of information. 00:10:10.879 --> 00:10:20.080 Um there's an industry standard called American Petroleum Institute API that also uh writes guidelines for our industry that dictates burner testing. 00:10:20.320 --> 00:10:21.759 Um I've always viewed it. 00:10:21.840 --> 00:10:24.480 Um burner testing is cheap insurance. 00:10:24.559 --> 00:10:32.080 You can go out, look at it, uh, lay your hands on it, and test it before it gets out in your in your uh in your your field application. 00:10:32.159 --> 00:10:37.200 Uh Jim always likens it, uh Jim Deller, our CEO, always likens it to test driving a car. 00:10:37.600 --> 00:10:46.399 Um Marrying the two technologies together, the test and the CFD, uh testing gives you, you know, you can use your five senses to look at the burner. 00:10:46.480 --> 00:10:59.120 Um CFD takes that single burner test and looks at the the burner in process heaters whereas multiple burners you can look at as a system and and predict uh future you know potential problems in the field. 00:10:59.200 --> 00:11:02.320 So that really uh helps us out selling the product. 00:11:03.679 --> 00:11:11.120 And I've learned that your refiners and and and chemical producers, which are your customers, that they're famously uh conservative buyers. 00:11:11.279 --> 00:11:20.240 Um, how do engineering studies and the customer testing kind of help a newer company build that very important trust and get into a customer's uh approved vendor list? 00:11:20.799 --> 00:11:21.039 Sure. 00:11:21.200 --> 00:11:29.600 Yeah, you could imagine uh you know emerging technologies or new technologies that get introduced to the field, um, they don't have there's no experience list. 00:11:29.679 --> 00:11:34.159 And so it's hard to point to an installation and say, hey, look, we're successfully doing it over here. 00:11:34.480 --> 00:11:45.440 So um CFDN testing can be used in combination to basically uh stage gate the process, uh, minimize their their initial cost input to evaluate the technology. 00:11:45.519 --> 00:12:04.159 And it's kind of, I don't want to use the word sneaky, but it is kind of sneaky because it allows us to get uh a product in front of them, uh get them comfortable with it, and then once they've reached that position, um, they can go to their management and get us basically approved on their manufacturing list uh to get a product in place. 00:12:04.240 --> 00:12:10.240 So it's it really helps uh us give them a low-cost way to value with the technology. 00:12:10.399 --> 00:12:15.759 And then obviously both sides can back out if we see a problem that one of us doesn't want to tackle. 00:12:16.000 --> 00:12:19.360 But um that obviously leads to field installations. 00:12:19.600 --> 00:12:34.639 And yeah, if you want to go from early adopters to mass acceptance, uh field installations are where it's at because you get your users list built up, they get more comfortable because now they see it's been in service for a period of time, and then uh they they see the range of application. 00:12:34.879 --> 00:12:45.039 So it um but CFD testing for sure can get your get your foot in the door in a much more scientific method, which helps them sell it up to their management team. 00:12:45.440 --> 00:12:46.080 Okay, thanks. 00:12:46.240 --> 00:12:47.279 That's that's really interesting. 00:12:47.360 --> 00:12:52.720 I I want to turn over to the uh uh to Matt to talk about uh the platform kind of step back. 00:12:52.879 --> 00:12:58.960 Um, you know, investors often think of ClearSign as a single burner story, but that which is definitely you know is not. 00:12:59.120 --> 00:13:11.360 Um Matt, could you help sort of illustrate for investors how the ClearSign Core Toolkit carries over across process burners, flares, and midstream products, and how does that speed up uh new product development? 00:13:11.759 --> 00:13:12.639 Absolutely, Peter. 00:13:12.799 --> 00:13:15.519 You know, the analogy of a toolkit is actually a great one. 00:13:15.759 --> 00:13:23.519 We're now at a point as a company with our patent portfolio and technology development where we can carry key features from one technology to the next. 00:13:23.600 --> 00:13:29.600 So actually, certain components are reusable between designs, between the process burner, the flare, and so forth. 00:13:29.759 --> 00:13:38.000 The core components or the platform uh developed in the process burner have been able to be carried over into these other applications with some great results. 00:13:38.240 --> 00:13:48.399 Similarly, our M1 and M25 burners build on this idea by reusing the component technologies and kind of the process side design of the burners in different market verticals. 00:13:48.639 --> 00:13:56.559 So now we can follow this design pattern into other adjacencies as well, such as hydrogen reforming, ethylene production, or process air heating. 00:13:56.799 --> 00:14:01.600 So, really, it's not only about the technology, it's about this repeatable work process. 00:14:01.759 --> 00:14:11.440 Uh, starting with a reliable digital, digital first prototype, we can reuse the components from our toolkit and then move into physical testing only

when required. 00:14:11.600 --> 00:14:18.080 And that helps us help keep us asset-light, right, while still producing more reliable and higher performing products. 00:14:19.120 --> 00:14:22.000 Okay, so that that makes sense, Matt. 00:14:22.080 --> 00:14:28.559 So with but with so many possible applications, how does a team at ClearSign kind of decide which opportunities to pursue? 00:14:28.639 --> 00:14:33.759 And and how do you sort of you know avoid becoming a custom engineering shop that solves one-off problems? 00:14:34.000 --> 00:14:34.240 Yeah. 00:14:34.480 --> 00:14:40.960 I'll preface this by saying that I spent several years in product marketing, which was a very valuable uh time for me. 00:14:41.120 --> 00:14:51.360 It's true that usually if you solve a problem for one customer, others likely have a similar problem in our industry, but that's not really enough to build a scalable business. 00:14:51.519 --> 00:14:58.159 So I've learned the hard way when working other under other systems that you need to think market first and not technology. 00:14:58.480 --> 00:15:02.960 So the market viability and fit govern where we spend our development time. 00:15:03.120 --> 00:15:11.600 You know, we'll look at the we'll look at the size of the market, the number of installations, uh, the overall fit of our technology before we start pursuing a new style of product. 00:15:11.759 --> 00:15:17.200 So our priorities are always set for growth when we're looking for for where to spend our technology investment. 00:15:18.399 --> 00:15:30.480 So on here, uh, you know, Matt or Jeff, you might uh both have some uh input uh on this question, but you know, parts of the combustion industry, as I understand it, they still rely on, you know, let's call it rule of thumb uh engineering. 00:15:30.639 --> 00:15:37.039 Um, where has ClearSign found customers who were poorly served by existing suppliers? 00:15:37.600 --> 00:15:43.679 And what is that, what is that sort of you know, uh bringing more engineering rigor look like uh in those markets? 00:15:46.080 --> 00:16:03.759 Yeah, I think that one thing I'll say is using the advanced tools such as CFT, the CFT capability we've developed, uh design space exploration, and hopefully in the near future, suitable AI, we can actually look inside the flames and develop combustion technology rather than the old-style iterative physical design. 00:16:04.080 --> 00:16:11.200 So some markets that we've entered into, they've not really rethought their design principles in decades, which is a pretty large gap. 00:16:11.360 --> 00:16:14.399 And these are usually the areas with the lowest hanging fruit. 00:16:14.559 --> 00:16:19.200 Uh so the CFT does let us retrofit our technology into some very old designs. 00:16:19.360 --> 00:16:25.440 We may work on heaters that are 40, 50, 60 years old while reducing implementation risk when we do that. 00:16:27.360 --> 00:16:32.399 So uh yeah, I've I've got a couple of uh you know final uh closing questions for each of you. 00:16:32.480 --> 00:16:34.240 So let's start off with Jeff. 00:16:34.399 --> 00:16:41.360 Um, what would success in larger, more demanding applications such as ethylene plants mean for ClearSign? 00:16:41.919 --> 00:16:42.159 Sure. 00:16:42.320 --> 00:16:53.120 Yeah, with the with the the burner application, and and obviously in our past lives, um you develop a technology and then you look to adapt it uh across verticals. 00:16:53.279 --> 00:17:05.200 And so you know you get a process burner working, uh, you've got a stable platform of technology to work from, and so you adapt it to in our in our uh in this example, I'd say reforming and ethylene. 00:17:05.680 --> 00:17:25.200 Um those jobs are are technically more difficult, but the payoff's huge because you go from a refining project that may have you know zero to 40 burners to reforming where it's going to be somewhere between 20 and 200 burners, and in ethylene, uh you could have 30 burners to 500 burners on a single project. 00:17:25.440 --> 00:17:34.400 So you can imagine your unit count goes way up, and if you can start winning those big projects like that, uh you know the growth for ClearSign could be geometric. 00:17:35.519 --> 00:17:43.680 Uh and then Matt, for you, what's the one thing uh you'd most like investors to understand about the platform that you're building at ClearSign? 00:17:43.920 --> 00:17:51.519 Yeah, so I think it's important to note that we're putting the people, the tools, and the processes in place to move our technology into the market. 00:17:51.680 --> 00:17:56.960 And not only our current technology, but also new technologies that are still on the drawing board. 00:17:58.319 --> 00:17:59.119 Okay, that's great. 00:17:59.279 --> 00:18:01.839 Well, Matt and Jeff, thank you so much for uh joining us today. 00:18:01.920 --> 00:18:07.200 I think investors really appreciate uh a deep dive like this to sort of you know check under the hood, so to speak. 00:18:07.279 --> 00:18:16.960 Uh this has been a great uh you know compliment to the events that we've hosted with Jim Deller, and I really think it helps uh investors understand the platform and ultimately the team that's uh driving clear science growth. 00:18:17.200 --> 00:18:19.759 So, you know, thank you so much to to both of you. 00:18:20.160 --> 00:18:24.240 Yeah, Peter, thanks for to your team and yourself for uh taking time with us. 00:18:24.559 --> 00:18:24.960 Appreciate it. 00:18:25.279 --> 00:18:25.440 Thank you. 00:18:25.920 --> 00:18:26.880 Jim back over to you. 00:18:27.039 --> 00:18:27.279 Thank you. 00:18:27.759 --> 00:18:30.960 Thank you, Peter, and uh Matt and Jeff, thanks so much for joining us. 00:18:31.039 --> 00:18:36.160 That was a really interesting deeper dive into uh ClearSign technologies and uh appreciate your time today. 00:18:36.799 --> 00:18:37.519 Thank you for having us. 00:18:37.839 --> 00:18:38.880 Yeah, no problem, Tim. 00:18:39.359 --> 00:18:54.880 Thank you for listening, and don't forget to subscribe as well as visiting wwwatertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules. 00:18:55.440 --> 00:19:00.000 We will see you next time for another edition of the WTR Small Cap Spotlight Podcast. 00:19:00.640 --> 00:19:05.680 Finally, a special thanks to the producer and editor of the podcast, Kristoph Fitzpatrick.