ClearSign Technologies Corporation (CLIR) Earnings Call Transcript & Summary

Good day, and welcome to the 2020 Annual Meeting of Shareholders of ClearSign Technologies Corporation. I would now like to turn the conference over to Rob Hoffman, Chair of the Board of Directors of ClearSign Technologies Corporation. Please go ahead.

Thank you, operator. As he mentioned, my name is Robert Hoffman, and I am Chairman of the Board of Directors of ClearSign Technologies Corporation. As you know, due to the COVID-19 situation this year, we're holding our annual meeting in an all-virtual format. Nevertheless, we strive to make the meeting as inclusive as possible by offering our shareholders the same opportunities to participate as provided at the in-person portion of our past meetings. I will be joined telephonically this morning by Jim Deller, our Chief Executive Officer; and Brian Fike, our Chief Financial Officer and Corporate Secretary as well as by the company's other directors. We'll get the meeting going by attending to a few formalities though. Brian will address the business portion of the meeting, followed by Jim Deller, who will address our progress over the past year and our opportunities that lie ahead. Following his remarks, we'll have an opportunity for Q&A, but first, let's attend to a few formalities. If you are a shareholder and wish to ask a question, you can submit your question at any time on the virtual meeting website. We will attempt to address any and all questions that you have during the session. If you have not voted or wish to change your vote, please do so now. The polls are open, but they will close in a few moments after Brian's presentation of the business portion of the meeting. The Board of Directors has appointed Brian to serve as our inspector of elections with the assistance of reports from Broadridge Financial Services (sic) [ Solutions ]. We are committed to creating a balanced and effective board with diverse viewpoints and deep industry expertise. This year's Board nominees represent a wide range of backgrounds and experiences, and we believe our diversity of experience, perspectives and skills contributes to the Board's effectiveness in managing risk and providing guidance to management. As we look to the year ahead, we remain excited about the opportunities ClearSign has in terms of its business, shareholder value creation and positive impacts at a global scale. Thank you for the trust you place in us and the opportunity to serve you and the company. Now I'd like to introduce the nominees for the Board of Directors who are here with us today. Besides myself, there's Susanne Meline, Chair of the Audit Committee; Bruce Pate, Chair of the Compensation Committee and the Nominating and Corporate Governance Committee; and Jim Deller, our CEO. Lon Bell is not seeking reelection. I do want to take this opportunity, however, on behalf of the entire Board to personally thank Lon for the many contributions he's made over the past 9 years. Lon brought tremendous wisdom and judgment to our Board, particularly in the area of intellectual property. His sage wisdom and even-keeled personality will be missed. During his tenure, he served on all of our committees, including a number of years as Chair of the Compensation Committee. Lon at age 75 claims he is "retiring", but for those of us who know Lon, we know he is merely moving on to the next chapter. I speak for the entire Board in hoping that Lon keeps us informed of what will take place in that chapter. And now I'd like to call the 2020 Annual Shareholder Meeting to order. I'll be serving as Chair of the meeting, and Brian will be serving as the secretary. As Chair of the meeting, I've adopted an agenda that will govern the rules of the business and the rules of conduct for the meeting. Copies of the agenda and the rules are available on the virtual meeting site. The rules of conduct also govern the Q&A session. Brian will now report the notice of the meeting, the proxies received and present the matters to be voted on. Brian?

Thank you, Rob. Welcome, everyone, and I will walk us through the short formal meeting we're having today. The notice of the meeting and the proxy materials were mailed by Broadridge Financial Services (sic) [ Solutions ] beginning on May 1, 2020. The notice and proxy materials were mailed to all shareholders of record as of April 24, 2020. This meeting is being held, therefore, pursuant to proper notice. We have received proxies representing more than 81% of the 26,709,761 shares of ClearSign's common stock that were eligible to vote. This means we have a quorum present, and the meeting is duly constituted and will proceed. Today, we have 3 management proposals for you to consider. They were all described in the proxy statement for today's meeting. The first proposal is the election of directors. The following 4 people have been properly nominated by the Board: Robert T. Hoffman, Sr.; Susanne Meline; Bruce A. Pate; and Colin James Deller. The Board recommends that a vote be cast in favor of each of them. The second proposal requests that you ratify the selection of the company's independent auditor, Gumbiner Savett Inc. for the fiscal year 2020. The Board recommends a vote in favor of this proposal. The third proposal is an advisory vote to approve executive compensation as disclosed in the company's proxy statement. The Board also recommends a vote in favor for this proposal. The proxy statement described a fourth proposal, which is a proposal approving one or more adjournments of the annual meeting to a later date or dates to solicit additional proxies in the absence of a quorum. However, because a quorum is present at this meeting, the passage of this proposal is no longer necessary. We have received no questions relating to the proposals being voted on. Therefore, the discussion of the matters for shareholder consideration is now considered closed, and the polls will also be closed. I will share with you the preliminary voting tabulation. As to the first proposal, all 4 nominees on the ballot to become directors are elected with at least -- with over at least 83% of the votes cast. They will serve until the next Annual Shareholders' Meeting and until their successors are elected and qualified. Proposal 2, ratification of the company's auditor, Gumbiner Savett Inc., has been approved by over 99% of the votes cast. Proposal 3, the advisory vote on executive compensation has been approved by more than 97% of the votes cast. We will report the final results of the voting in a current report on Form 8-K that will be filed with the Securities and Exchange Commission within 4 business days. With that, we have completed the formal portion of the meeting, and the meeting is now adjourned. Let me hand the remaining portion over to our Chief Executive Officer and Director, Jim Deller.

Thank you, Brian. And thank you, everyone, for joining us in our Annual General Meeting today. I want to say a little about the current and recent events and our expectations for the future. I also want to reference our Q1 earnings call, which just occurred yesterday, in which we gave much greater detail than I will be able to give it here today. Clearly, our most significant and current use is the receipt of the ExxonMobil purchase order, the supply of burners into their Baytown Refinery. This is a market priced order for us. However, also, we believe its value far exceeds its revenue. This supply is the final stage of refiners' very thorough validation of our technology for their future deployment. The order includes a supply of 4 burners and also a full-scale performance test and computer model of a destination heater with a ClearSign core burners installed. We are very optimistic that what is in effect the significant endorsement by ExxonMobil will act as a catalyst and encourage the engagement of other major customers to similarly consider and plan ClearSign technology as part of their own solutions for cost-efficient emissions reduction and also for the businesses with whom we plan to form collaborative partnerships. The selection and courtship of these relationships has been done with great care. We hope to have more news on this front in the near future. Just over a year ago, we redefined the business strategy of ClearSign, and in November 2019, renamed the company to ClearSign Technologies Corporation to reflect both the new breadth of the company's technologies, but mainly the focus on providing technology or the use of our technology and products manufactured by others rather than being a manufacturing company, delivering manufactured product ourselves with a much greater capital requirements and typically lower profit margins that type of business entails. This model was recently demonstrated in our full-flare core order from our alliance partner ASHCOR, sold by International Combustion and Controls, a division of our sales and installation partner, California Boiler. Our boiler technology is progressing well despite not being able to get back into China since leaving in February just before the start of the Chinese New Year. We have a newly completed 1-piece 5G boiler burner design that we will install for commercial certification as soon as we can get back into the country, hopefully, within the next few months. This, in addition to the water tube boiler opportunities, is an exceptionally large market opportunity for us, and we very much look forward to getting back on the ground there and pushing ahead with the development of this business. Our sensing technology has been developed rapidly since our decision to focus on developing a product to detect the flame on process burner pilots. This decision was based on clear and enthusiastic feedback from our target customers, which has been consistent throughout the product development period. We now have pilot production articles in the final stages of testing, both the hardware and also the electronics and coding. We are also working with selective production vendors on product optimization and planning for production. We look forward to and anticipate installing the first of the line sensors in custom sites and proceeding to a market launch, hopefully, later this year. We have, of course, had to modify our work due to the effects of the coronavirus. We did take action early and were able to adapt quickly, so ultimately, the real impact on our business progress was minimal. We should truly expect the next few months at ClearSign will be exciting. We will, of course, issue press releases on material developments and also post more general news on our LinkedIn site and its updates to our website. I thank you all for your continued loyalty to ClearSign and for participating in our Annual General Meeting today. Now Rob, Brian and I will be responding to any questions we have received from you.

At this time, there are no questions. We will reference that there is a replay of the Q1 call, which Jim mentioned, at -- on the Investors section of our website, and we will be filing a transcript also with the SEC.

Great. Thank you, Matthew, and thank you, Jim, and thank you all for joining us today. Before I conclude the meeting, I also want to thank Jim and the rest of the ClearSign team for the tremendous effort that has been put forth this past year plus. While it was evident to me that our technologies were and are incredible, but it has taken someone with Jim's experience and vision to get us here on the cusp of true commercialization. The best is yet to come. This concludes the Q&A session and the entire meeting. We'd like to thank you for your participation. If you'd like more information, please visit our website, www.clearsign.com. Thank you again.

Thank you. The conference has ended. You may disconnect your line at this time.