As RM readers know, I am always searching the world for new, innovative companies. One such opportunity is Sarcos Technology and Robotics Corp (STRC) . STRC came public on September 24, as it successfully "de-SPAC'ed" from Rotor Acquisition Corp. I have been fortunate enough to build a relationship with Sarcos' CEO, Ben Wolff, and will be hosting him in the next version of Excelsior Capital Partners' Fireside Chats. The call is scheduled for next Tuesday, December 7th at 11 am ET. Connection details are at the end of the column.
When describing Sarcos I have to continually remind myself not to make references to that classic 1987 film, RoboCop. Sarcos' Guardian XO, an exoskeleton product, does remind me of that film. All great tech companies are premised on solving an existing problem, and Sarcos is no different. Instead of fighting crime in futuristic Detroit, Sarcos' products, and the related IT, aid humans in performing tasks that are physically difficult or ergonomically stressful.
Sarcos has two core product lines under development, both of which are scheduled for commercial launch by the end of 2022.
The Guardian XO exoskeleton is a fully-powered, full-body workforce multiplier that, according to Sarcos, can provide the capabilities of three human workers, lift up to 200 pounds and only requires 30 seconds to don or doff. It is difficult for me to do it justice with only words (see: www.sarcos.com for the pictures/videos).
The most attractive verticals for XO, in my opinion, are aerospace (Delta Air (DAL) is both a customer and an investor in STRC,) parcel handling and automotive assembly. As someone who has spent a large portion of his adult life visiting auto plants, I know that ergonomics on the assembly line are always topic number one for plant managers. Unfortunately, repetitive stress injuries are quite common. Guardian XO addresses those issues.
On a meta level, Sarcos' corporate presentation addresses the elephant in the room for the labor market: The extraordinary and unprecedented current rate of departures from the U.S. labor force. Making workers' jobs easier could, presumably, stem that tide of departures. Sarcos measures the total addressable market in the U.S. at $147 billion - accounting for all jobs that could benefit from robotic augmentation - and STRC management further segments that into a serviceable obtainable market of $15 billion.
The Guardian XO has won a passel of awards, including CES Best in Show in 2020, but that is only half of Sarcos' product pipeline. To augment the human-worn, fully-powered Guardian XO, Sarcos is also developing the Guardian XT. XT is a robotic avatar that is operated remotely through a human interface (Sarcos management calls it a SenSuit) and can be mounted on mobile or lift devices. XT takes Sarcos' robotics wizardry to a completely different level than the wearable XO suit. The use cases are varied: overhead wire repair, building repair, oil and gas facility inspection... any tasks that occur at height or in otherwise dangerous situations for humans.
Human beings have physical limitations and machines have limitations to how quickly and adeptly they can learn. With a massive patent estate (140 issued and an additional 90 applied for) Sarcos is throwing tons of engineering firepower at this existential industrial problem. The real genius from Sarcos is not just its product, though, but the way it will be sold. Sarcos envisions XO and XT being sold under a monthly-pay "robots as a service" model. Just as SAAS revolutionized the way that companies use software, STRC management believes RAAS can greatly expedite the acceptance of its XO and XT products.
Sarcos began at the University of Utah in 1983 and really took shape after a DARPA project in 2000. Ben Wolff led a management team that purchased the company from Raytheon (RTX) in 2015. As part of the de-SPAC transaction on September 24th, Sarcos received a PIPE (private investment in public equity) of $220 million from an investor group including Schlumberger (SLB) , Caterpillar (CAT) and Palantir (PLTR) . Sarcos is also contracted to purchase $40 million in software services from Peter Thiel's IT colossus PLTR over the next five years. When analyzing a recent IPO, especially a SPAC, judging the company that the company keeps is crucial. Sarcos has an impressive list of blue chip partners from the U.S. Department of Defense to Silicon Valley.
STRC is essentially a pre-revenue company ($1.1 million recognized in its most recent quarter) but is currently accorded a market value of just over $1 billion. STRC commenced trading on Nasdaq on September 27th, and STRC has faded somewhat since the IPO transaction, which was priced at $10/share. STRC closed yesterday at $7.32 per share.
Please listen to my Fireside Chat with Ben Wolff from Sarcos next Tuesday. Sarcos has proprietary IP that drives a VERY cool technology, and I believe there is an attractive value proposition for investors in STRC, as well.
(Please click the link to join the webinar: https://us02web.zoom.us/j/89109708052. Or One tap mobile: US: +13126266799,,89109708052# or +13462487799,,89109708052#)
