Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Sarco’s First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Shelton. conference like speaker to now Maria today, would hand over the your I ahead. go Please

Maria Shelton

Thank you, XXXX afternoon and operator. Good Robotics Sarcos to Corporation Technology the first quarter earnings everyone, call. and welcome

Executive in will and the highlights call talk from of will detail Financial are and and Joining us recent call the Drew financial Officer, Hamer. with then this Allgood; Kiva on Kiva Drew business quarter events, the about Sarcos and the afternoon before from more President first Chief start takes management Officer, analysts. discussion Chief a results questions

Before market we future revenues, contain commercial state size demand customer trends, capabilities, products, financial today's concerning forward-looking availability and call and of our and condition including expectations, begin, will flows we future and must cash production product costs, and statements and statements results, liquidity. markets including and features that target

the many of annual report we to on Form risks events there and those release. filed actual our related our of mentioned in be statements acquisition financial SEC plans beliefs those with are those addition, companies future management's our combined company, combination statements earnings described of any and projected. to press uncertainties today, future statements. forward-looking are risks as cause benefits but two to represent and the Among integration other differ that could to including performance regarding have REX, in achieved, of expectations and regarding the what the about statements the performance are In results These from the and today's expectations today uncertainties XX-Q

in further and in filings review these and information to with the the risks described this release press and for you our potential encourage regarding actual SEC uncertainties. risks and We uncertainties

website Investors with at statements website. and our our the on in quarter which we filed including We SEC's special posted you release regarding for XX-Q first review the earnings XXXX section SEC in the this the and to forward-looking sarcos.com notes of and also encourage afternoon

is as today. measures Throughout be with otherwise the directly and to and this non-GAAP recording In SEC limitations be information we in non-GAAP of the as to on website. available certain well our June date release and undertake description, we'll for will The all addition, noted. XXXX. will information as giving call, be included discussing this of until unless such SEC's rationale this on measures, call of also afternoon on measures today's on the which filed the A that any the website reconciliation the most and available earnings financial our our we're GAAP call comparable measures financial no are is call measures obligation website XX, this subsequently. on A update GAAP,

Kiva of over the this to to I'd call Sarcos. At like turn President point, CEO Kiva? and Allgood,

Kiva Allgood

Thank Good and to joining you, afternoon the everyone today. Maria. welcome call us on

saw press release, gaining you sales coming production, we our push as initial from the in commercial in our revenue product As contracts momentum quarters. development toward we are

to able Guardian second been of of expect the sale, half the we and world. products out real there. some sales get And family of product available are year ramp we the for from that products Now the in to working grow up have in commercial

to agreement capacity XXX grows, this manufacturing We're excited XXX for production will of initial beyond products about the relationship demand year. our And grow Guardian of units recent to per us family with Jabil. our as allow

XT how improve with safety. they interest at and as surface preparation, we could be, America, impactful the in market which cutting, robotic heights we attended XM how tele equipment required work in see are And a such tasks Guardian as opportunity and believe large shipbuilding us operated In our product was who their can in tradeshow XX construction, and ablation, and companies firsthand solutions with all as tremendous laser our booth, construction for there Sarcos. began March, engagement performed help our grinding doing largest traction and we could semi-autonomous more of the speaking at ConExpo, we about demos North productivity than represents

performed software weeklong event, is comes conditions. the solutions from which include we the the even how our to Over well. demonstrated rain when while in safe dangerous And components working executed it solutions. keeping improve productivity team Sarcos hardware, Seeing and workers and believing

aviation professionals to three-day site industry and the Now aviation and and on life, that actively around series industry took that experts road networking the Summit, robotics part tours, April come the events Sarcos world. shows we've been only our a invitation from verticals. In our products at workshops, brought robotics and in have focus of together

The with industry. travel of Delta experience. the Pittsburgh Jorgen the critical of International Airport aviation Airlines solutions CEO to the operational how solve the the goal in industries Chief aviation business summit with focused and Officer to Operating robotics a robotic and of are panel was participated discuss the for advanced and on improving growth challenges our Pedersen,

our thrilled we robotic than solutions and and systems the inspecting summit feedback demonstrations see offer. we Pittsburgh received attendees XT from leaders. spoke to about conducted have industry were to XX specific our the airplane aviation attendees handling All host and as we an able many solution baggage Guardian over well And we fuselage positive were solutions the at more very headquarters, aviation to as where

our to formally and VideoRay Houston demonstrate Conference another at and last Guardian our matters. onto their Offshore demonstrated vehicle. and professionals solutions can OTC partnership on at the robotic operated show, we opportunity how remote underwater exchange week Technology our C-class with resources where retrofitted in energy be ideas offshore the Exhibition, We had announced We environmental

class and bring We dexterity human to market arms adding leading inspection, like VideoRays hands. ROV by

The subsea X.X opportunity as billion VideoRay. expected addressable Underwater It with is such salvage. Guardian promote great important as a to jobs in market our XX% new Now and market be Robotics it well year do serviceable the globally maintenance C ship is can XXXX. agreement growing complex was to and class as a

that performs In Putting intended, are to events, closer step as a we onsite durable industry solutions customer out needs. critical our to product ensure the testing been our specific and system sale. meet addition software customer's doing have to

as validation I help development facing industry our costs. while in our on And we robotic the an to call, completed shortages, for product productivity, field increase mentioned solution final our contract reducing installation last solar construction labor

XXXX will achieving by early We're to us XXXX. which end also of year, to track the ISO certification on compliance our put on way achieve the in

meet Sarcos technologies that ensure Robotic These The without are as generate steps We Solutions can't in-person, witnessing proactively to revolutionary quality talked -- today our video. we sales and that sale the excitement a with potential duplicated and quality requirements, a are sales important commercialization I've applying introduce be how the are, our from business about customers brochure a even to demand. customers we toward reliability momentum. throughout events or comes standards our

The intelligence, solutions for we and market Guardian now like baggage handling. and developing to solutions, ones and machine new as to lower greater groundbreaking for based foundational learning, This simulation available development unstructured panel with at advanced to installation service bring modeling as industry are speed These will technologies are artificial specific enable a Sarcos launch a is solar family of products we technologies are the costs. delivered work spaces. physics bringing foundation solid RFP, into set such and

commercialize at ability for we the we million the and Offshore this Aviation this as technologies we're the our targets year million confident lineup, sales market and With Summit momentum Technology new $XX in the achieve our and strategy game created revenue our momentum $XX ConExpo, develop Conference, Robotics future. in to to existing

these a of the continue XXXX. $XXX Our global construction TAM which opportunity reinforces opportunities approximately in billion participation in commitment in represent our aerospace, events to the to collectively industries underwater and we pursue

refining After we only commercial our the reduce XXXX sales R&D be recently positive and operating working product, XXXX be goal cash when third-party pace proactively reducing exit expenses availability costs, of to business all we in a model while to flow to announcing with are on increasing by

financials. turn Drew report And it the now to I'll on over to

Drew Hamer

the is to performance the of a XXXX. here REX pleasure Thank April you, everyone note today be the include the speaking line, squared that results from XX on you. with close year financial Kiva. on To transaction Please last our for of it

formerly revenue. to research products, Product contract Also, as on last call was revenue type our what development Development earnings cost and including contract discussed and and Research relating Services our product commercialization from agreements. please called we of note development agreements and the price that contractual primarily development of the called now types comes fixed is revenue different development

Now, are will I comparisons the turning financial all year-over-year. to results, use

of revenue with $XXX,XXX due $X.X For associated $XXX,XXX contracts. the XXXX. during by the XXXX, revenue million The in $X.X from to Cost XXXX, development development compared to $X.X was million of mainly to I quarter mentioned. first million of quarter cost the the product due as was product revenue to just increased contracts, first increase to increased compared

quarter a expenses, cost expenses total to $X.X million. XXXX first revenues from of were XXXX million, operating $XX.X decrease First including operating quarter of the

by acquisition the increased was driven million increased This the by increase to was also from of expenses Research expenses I’ll $X.X $X.X primarily increase increase materials headcount to direct now operating development quarter. discuss charges. this Part detail. more in of REX. million in and first related the

million, first expense. to increased compared primarily expenses North third-party Sales from of increase an construction Management our due to million million stock-based costs to $X.X show The platform equipment to marketing Data XXXX, decreased quarter, $X.X largest administrative first due and trade down were costs and of $X.X in General the were $X.X compensation from expenses and quarter million, the America. ConExpo. in to increased a attendance

loss $X.XX XXXX in share, million, a the share $XX.X or quarter net or per to net million, was of loss first of prior loss year. loss quarter of $X.XX $XX.X First the compared per of

net $XX.X million We or First net per or equivalents share, million, $X.XX a was share XXXX. loss marketable to in of the securities. per quarter in of $XX.X of loss unrestricted with quarter, and loss compared ended non-GAAP $X.XX loss cash $XX.X cash, million,

turn guidance. to I our financial am now going to

of the For XXXX. quarter second

approximately million million. will be work the in approximately cash Reflecting revenue the month. revenue used sales. per our operating We $X activities from be expect total in we to reduce $XXX,XXX estimate of $X.X operating to Approximately quarter product will expenses, revenue average the

which is we March XXXX. XX, to As purchase an and $X expected commitment settled year to all during expenses XXXX, have of unconditional is December million, ended which be related of the operational XX of

one the second to of XXXX. in two expect of amount pay each quarters third equal We this installments, and to

XXXX. full Now for year the

$XX are ramp of financial the We approximately $XX our mix, expected is between up year. reaffirming and is the of guidance be are the Full XX% million. sales, second to our revenue of guidance. it year. year the to expected XXXX we'll Product half to and range in will half toward contract million XX% year Product be approximately sales revenue be development second expected and full XXXX year full total the of weighted

decrease Turning further expenses enhance to development we our are compared Research we products and as our engagement existing with and expenses. on future XXXX to operating as software. third-party as develop to providers, products and in XXXX reduce our service to expected efforts refine our continue and

of in expenses expense, with growth With in in stock-based company commercialization increase increase XXXX our revenue to line maintains the and works administrative compensation and XXXX expect will general expected in company future. Sales the and pathway the exception compliance we requirements. marketing on as public the its slightly slightly

taken in months Looking XXXX. currently of we our have and capital have plans to XX satisfied and liquidity steps Furthermore, least believe are at business we sheet, our the at have financing an with do balance no for seeking to sufficient without we capital. manage next fund to use cash our additional equity numerous our

to to when to are increasing working we XXXX while a to proactively exit with be goal mentioned, cash positive previously able we in expenses, Kiva pace reduce flow sales all As operating be XXXX

I'd end the remarks. the to to like you turn to of that question? ask a over Would call is you Operator, the my now. instructions kindly repeat prepared

Operator

Instructions] first Jeffries, line of open. your [Operator Our question Stephen, line with is the comes Stephen Volkmann from

Drew Hamer

there? you are Steve,

Operator

Hi, Stephen.

Stephen Volkmann

you now? me Can Yes. hear

Operator

sir. Yes,

Stephen Volkmann

how I still All what and right. -- figure COVID out still only to years can't been, unmute we myself. of It's four can't

Kiva Allgood

Yes, club. join the

You too.

Stephen Volkmann

learner. Slow

about that. Sorry

that with of just of year inflection a rate you Is I sort for expected use that with we sort started reasonable any know the the about about? well? is year in as a Or you you when of can quarter. rest there the there talked the cash rate the should as Drew, that So, quick second

Drew Hamer

in things. my which other two $X $X me, rated for think mentioned includes million I kind so month, I million Yes, it's these of a the prepared really adjustments that XX which ends talk being for The I about -- remarks. up quarter the the here,

But So, an $X the you be of year. there's that we has layers, that, out of QX, QX. looking take honestly think that, quarter reports at million, in run charge in if out acceptable paid this kind to two that probably you're the additional that this rest is for if

up So around… it being ends

Stephen Volkmann

just Got again, you. because Thanks. that, Good, can I here. say you on stepped

Drew Hamer

$X ends know, being $XXX,XXX up month. you million That, a about

take So that you things to to run the down X.X. out rate bring about

Stephen Volkmann

what Kiva customers of question. the kind of that's applications, it maybe have funding out you spending first sort a thought. we And here? then of types of is to there developing, the Super, you obviously, which expect Is you're development I about, Cool. can tell be us should what here. anything your gate time more But

Kiva Allgood

Yes, great question.

time and first getting go. been we has say exciting, utilizing, in quarter and getting it's here product part is for field available in can this our because super this the the sale, customers you us, for think I

able So we're been really focused last scale, the this if all hit super we've we in about height. where that segments a the really on. to de-icing from out, the you fact cleaning, side fastest, of year think or got been you're at on can height, And to we person the that's remember, figuring work are that where at anything basket down the you've doing that a aviation house, of something has doubling

down area an again, on doubling underwater. that's So aviation,

the So Technology Texas. at we events, event were is just the Ocean in OTC which

are a down And a cases again, where all currently team performs have those that goes you task. dive and use

in a places have our -- you spaces Now put in diver can task dangerous now. product you to that perform don't

underwater, say those where at aviation work I'd on areas side, So it's then the the and are construction height.

So definitely there. focused we're

then construction, And executed on we solar demos. construction, the

we're And solve these solutions So creating in very those segments. of those pain critical were then to foundational technology. taking each that really points these

Stephen Volkmann

be at on then those fully to working Or sort applications are solutions sort operated first? should of already? And automated remotely expect of you we

Kiva Allgood

We call semi-automatic. it

can a loop, semi-autonomous So robot, it first in the again, in it can it train around, perform and you've got then go can a human perform in it cases, the some that way. the

and performs say, this says point an -- hey, point says you point tasks So A to from afterwards. I B, you then A from clean of It to the the actually side the need human airplane. robot

the the of that you a cases we if semi-autonomous a had way then a to every poll of trainer, and that So where be robots labor conversation can last seem. a use actually they fleet we take based getting the could human that remember, around lot in the and is as that of time, we're but fact off managing shortage almost talking industry perform we're

Stephen Volkmann

Super.

it. Okay. Appreciate I'll on. you. Thank pass it

Kiva Allgood

You for bet. joining. Thanks

Operator

Thank much. very you

please -- for next our next wait Our call.

line is Suisse question open. Research. comes Credit Guy next at from line Securities Hardwick Our the Guy, your of

Guy Hardwick

good Hi, afternoon

Drew Hamer

Thanks is Guy. for joining, all well. Hope,

Guy Hardwick

Yes, thank you.

if three the product your like anywhere QX includes you sales, can So case, $XXX,XXX it so that's I of and tell, one looks between and guidance guess who's products customer? that's systems, robotic which the

Drew Hamer

the our of now there that we're to in with that are units that they of factories, the available potential providing start in producing are units evaluating these people the for and go use can't unit. kind into waiting who line them anxiously details get initial sale so So customer, an can get so customers them the are we case,

make by a discussed cases, robot for and in So talks they're a meeting they'd we it and fill with scenario its which evaluating created instances, the or the existing use strengths, it's requirements, other void where support employees really like they're to he the or sure just previously to traditional, some about various shortages, robots him. testing there's worker where

half the of go out needs initial for second buying looking And we're buying that unit. to we year, the just as sales robust kind in here, expand. of the So

it's it's instance, particular just this In one really unit.

full system. So it's

and So were they're it. it's not initial to planning… the again, believe I sale selling testing related you unit. says, just arms the that's -- a software and my for old And to that the it everything team

Guy Hardwick

XT? and XM so TAM, SAM,

Drew Hamer

to detail wants he Kiva, here? a disclose little

Kiva Allgood

sales, we're we've R&D to number getting to revenue But your point, this traction. update the focus where what having really not to know is at you now point. modeling, really no, transitioned as detail I you have level to our know, the we're going from of to product your Yes, is, disclosing speak

this just the one cases I area, in be in to of use So specific outlined highlighted. likely that it's and

Guy Hardwick

order which And you book, an materialized the is have yet? Okay. over not do or half to going be second

Drew Hamer

well that to We already addition previously. have seen the has as order as book ConExpo, an OTC conferences, in of as orders with discussions the materializing we've been in been result customers

exciting for is there me, book right now. us for order it's very So an

Guy Hardwick

purchase contracted are a with order. these And orders

Drew Hamer

convert pipeline more they right should it's now, we there. as Sorry, get

from this everything specific its want software before the just anything manufacturing then those and buy and them. go and order. you the sure needs. larger to out you've them they'll there that test and move durability As that and manufactured it is never to else that units where make transition, People And first works meets

we So in getting step. orders And first places done, then to get as deals excited first sure. for really them be we'll announce bigger these that

Guy Hardwick

just And is final for Is on by me or X off stepped million it mainly? turn that the up one finished product imagery components the sequentially.

Drew Hamer

It's and of a materials raw products. finished combination

both in we So place have now. do

Guy Hardwick

I inventory you Have XM’s built in additional previous had think inventory. of you in any you quarter, XX units? said

Drew Hamer

on QX, -- in sorry, a So completion. keep focused going. we just QX here were There's

then started have that so also then systems So the talked out these us them steps and a being building stage state they're previously, have the we phase testing for where XT’s pre-production the C in sure And that pre-production where in place in to the stage were full the out the moving in move are them into for produced also a we of also are we so all also done, first can QX. arms units building step as And kind of making here. XM's, are a XM first get more to and XT, we it big as for further think post-production is, I we're units Class evaluation.

Guy Hardwick

you. Thank Okay.

Operator

Rob, line comes the of next is [Operator Mason Baird. Instructions] your line Our at from question Rob open.

Rob Mason

the Yes, around I’m follow supply last for have you have has you there raw just trending Maybe been forecast still around that in for in the good components acquire? year material raw to you how topic able curious afternoon. or a product there the Do the the today be just chain is on support inventory. to need or half components Do your -- that you to are ’XX of your components? inventory the sales up back

Kiva Allgood

we securing meet in earlier Johnson, calls, as Yes, the has Chain tremendous Supply Lisa be who's able job components and that Sarcos, we've to done we, schedule. communicated for making sure VP to the the build got of a

So to know, around throughout billion the to pre last had do yes, a we have hand we be components I communicated ensure to our orders. meet key $X in able that purchase year,

Rob Mason

agreement? background in VideoRay? been there Great. issued some To My working just release the have work quarter impression with there -- you during there might give you your round that past a press reference with was there the Can little the REX. VideoRay maybe

to product? guess contract one but current there relationship in and guess, navy with extent how Is to the had there? current those contract status can readily in I or you're into off what's And that potential VideoRays navy Sarcos? starting was also So integrated be just VideoRay starting reference units, awarded to or sell been I the they a

Kiva Allgood

Yes. Great question.

working to with leveraging here a had half team month, many, really and Diego, ago defender. and in actually tight Jorgen Are a the Correct. the I many and work relationship. month with and pleasure about talk in XXX%? VideoRay, it the are folks neutralization San you action firsthand a the see on been had So years for

the about that's are partnership, of out because the we're the best, excited part in the So they best vehicle there. VideoRay best

the They new we're correct Technology. to can Sarcos with have time, way. ability And a all very includes with in strong do short a the and units install semi-autonomous of relationship navy. retrofit in period a things the basically the and contract that also And base, very you

you because underwater, that we've piece So that it's task the as something, hard all with grabbing that those navigate make the those make cut them semi-autonomous water. so people of partnering equipment for of an to really things easier now RV, can well above to are a of to been

we're side a water, you lot that's And we the momentum navy. undersea in is some target getting a also people that's currently today, inspection, don't now good this there's the to. where the the believe it's of outside market, Again, they space, and whether strongly of seen large tasks, have are in maintenance, on whether commercial we've line

OTC too. So, last partnership, team really working that. the building really the of nice as is just first it well see for splash And excited, us the went well, week. product we're on we're it And was a tight but to team with

to a fun it's with So to growth a partner, forward them, looking them. but lot of we're good celebrate is with VideoRay

Drew Hamer

if added add our nature And the the to of And to customer arms show systems can they so, arms, faster selling selling be they that existing reaching can to be can in have that take can comes us so be do we can that to and the if -- them out sale. Rob we and I they their can sell that can customers just do existing wants they they on, be that Or field. on, if them are tend alternatively, existing is be system, to it to a can they such relationship to systems. also the they can

wants customers. kind ROV it both a one shop who system, so arms. if of to whole a structure for somebody the we individually our We're Or identify it's and trying the stop that

it make sell on we to side, selling though could either technology just is whole focus we've the the solution. available them. our So Even developed, real

structured there, sides. but relationship and to good it's So and nicely likely what's solid really be it's a relationship, both

Rob Mason

Drew. you, Thank Understood.

Operator

time, would the this for back remarks. closing turn very like Kiva to much. Allgood you I call to Thank At

Kiva Allgood

push headed, excited our momentum on to super We're targets Great gain the especially as for you. thank achieve we and you Well, Really customer as about market feedback. today. questions. the and appreciate commercialization. track where us year is we optimistic onward company joining towards We're guys

coming a great us. So thank you have questions evening. for the joining Keep and

Operator

for you program conference. Thank conclude does the your today's participation may disconnect. now you This in

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