Clean Energy Technologies, Inc. Navigates Challenges and Positions for Growth

Clean Energy Technologies, Inc. (CETY) is a company focused on developing renewable energy products and solutions to combat climate change. The company designs, produces, and markets clean energy technologies centered around energy efficiency and renewable energy. CETY’s goal is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities reduce energy waste and emissions, lower energy costs, and generate incremental revenue.

Financial Performance Overview

For the nine months ended September 30, 2024, CETY reported total revenue of $1,944,333, down from $5,278,203 in the same period of 2023. This decrease was primarily due to the deconsolidation of the company’s China operations. Gross profit for the nine-month period was $641,575, compared to $992,943 in the prior year period. The lower gross profit was also attributed to the reduced revenue from China.

On the expense side, CETY’s selling, general, and administrative (SG&A) costs increased to $3,193,447 in the first nine months of 2024, up from $2,463,090 in the same period of 2023. This rise was driven by higher salaries, professional fees, and stock compensation expenses. As a result, the company reported a net loss of $3,550,669 for the nine-month period, compared to a net loss of $2,460,489 in the prior year.

Despite the challenges, CETY has successfully repositioned itself and created four distinct business segments to diversify its revenue streams: Clean Energy HRS (Heat Recovery), Waste-to-Energy, Engineering and Manufacturing Services, and CETY HK (Natural Gas Trading and Acquisitions). This strategic move has helped the company create a larger, more stable, and more diversified revenue base with the potential for scalable growth.

Segment Performance

Engineering and Manufacturing Services For the nine months ended September 30, 2024, revenue from the Engineering and Manufacturing segment was $0, compared to $59,877 in the same period of 2023. This segment has been supporting the company’s internal projects, and CETY expects it to expand as the focus shifts towards providing comprehensive end-to-end integrated solutions.

Heat Recovery Solutions (HRS) Revenue from the HRS segment was $158,830 in the first nine months of 2024, down from $399,136 in the same period of 2023. CETY has a large pipeline of opportunities in this segment and is working to complete the engineering and design to execute contractual agreements and close these opportunities. The company is also exploring financing options, including working with financial institutions, to assist in funding these projects as it moves towards an Independent Power Producer model.

Waste-to-Energy The Waste-to-Energy segment generated revenue of $231,679 in the first nine months of 2024, compared to $779,720 in the same period of 2023. CETY has a significant $12 million contract with Vermont Renewable Gas in this segment and is currently finalizing the certificate of public good permitting to start construction. The company anticipates exponentially higher revenue from this segment going forward.

Natural Gas (NG) Trading Revenue from the NG trading business amounted to $1,185,178 in the first nine months of 2024, down from $10,462,385 in the corresponding period of 2023. This decrease can be attributed to the deconsolidation of the company’s China subsidiary, Shuya, as well as a slowdown in the Chinese economy. CETY has made a strategic decision to prioritize non-Chinese markets over expansion into the ASEAN region.

Strengths and Weaknesses

Strengths:

• Diversified business model with four distinct revenue segments
• Strong presence in the growing renewable energy and energy efficiency markets
• Expertise in waste heat recovery, waste-to-energy, and natural gas trading
• Partnerships and acquisitions to expand capabilities and geographic reach

Weaknesses:

• Reliance on equity financing to fund operations and growth
• Significant net losses and negative working capital position
• Deconsolidation of Chinese subsidiary impacting overall revenue and profitability
• Delays in securing financing for key projects, leading to higher-cost financing options

Outlook and Future Prospects

CETY believes that the global commitment to renewable energy, as evidenced by initiatives like the Paris Agreement and COP26, as well as the Inflation Reduction Act in the United States, provide a favorable macroeconomic backdrop for the company’s products and solutions. The European energy crisis has also created new opportunities for CETY to sell its self-generation capabilities in renewable energy.

The company’s four-segment strategy has created operational synergies and cross-selling opportunities across different markets. CETY expects larger revenue contributions from its Waste-to-Energy, Heat Recovery, and Engineering, Procurement, and Construction (EPC) segments in the coming year, as these are higher-margin businesses.

The company’s pilot Waste-to-Energy plant in Vermont, which integrates all of CETY’s technologies and expertise into a single solution, is progressing steadily, albeit with some delays related to permitting. CETY is also gearing up for the EPC segment to implement holistic self-generation solutions globally.

Despite the challenges faced in the first nine months of 2024, CETY remains optimistic about its future prospects. The company will continue to execute its corporate strategy to build sustained and profitable growth by providing end-to-end fully integrated solutions and technologies, expanding its global sales and marketing, production, research & development, and exploring synergistic acquisition opportunities.

Conclusion

Clean Energy Technologies, Inc. has navigated a challenging period, with lower revenue and profitability due to the deconsolidation of its Chinese subsidiary. However, the company has successfully repositioned itself with a diversified business model and is well-positioned to capitalize on the growing global demand for renewable energy and energy efficiency solutions. By focusing on its core strengths, exploring new markets, and securing financing for key projects, CETY is poised to deliver sustained and profitable growth in the years ahead.