Sarcos Technology and Robotics: A Player In The Fourth Industrial Revolution – Seeking Alpha

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Sarcos Technology and Robotics (NASDAQ: STRC) may have only been listed on the U.S. stock exchange for the first time in 2021, but this robotics company has been in business for 30 years. Having initially started at the University of Utah, the company went on to engineer devices for the U.S. government before recently branching out into the private sector. Through its many connections and backings from blue-chip corporations, the company is well placed to secure its future in an industry that continues to shape the very future of business.

We will take a closer look at the company's recent listing on the NASDAQ and what this means for investors. If anything, one can argue a bullish outlook on the company's future, though the timing may be critical in just how profitable such an investment could be.

investor.sarcos.com

Sarcos Technology and Robotics started in bioengineering in 1983, working principally as a research institution. It was not long after that it began to attend to the market's needs before it started working on exoskeletons for the military. The company operated as a robotics division for Raytheon, a principal U.S. defense contractor, from 2007 to 2014, before being acquired by a private consortium backed by huge names such as Microsoft (NASDAQ: MSFT). During the company's time working for U.S. government agencies, it began engineering humanoid exoskeletons that were meant to improve complex military operations. In the past, Sarcos has also developed technologies for NASA, the Department of Homeland Security, and other governmental departments.

The Guardian XO suit. (investor.sarcos.com)

Sarcos has developed multiple variations of exoskeletons and robots seeking to assist human labor in industrial environments by providing the capacity to work with heavy loads in otherwise dangerous surroundings. The company has 230 patents to secure its grip on the market. One such product is the Guardian XO exoskeleton robot, a full-body exoskeleton built for private industry and military defense and capable of increasing an operator's productivity while ensuring safety during operations. The Guardian XO was named one of Time magazine's "Best Inventions of 2020" and should be commercially available from 2022.

The robotics market continues to grow and was recently highlighted by the pandemic, when these machines were utilized for cleaning and disinfection, further proving their usefulness. As of 2021, the global robotics market was valued at $55.8 billion and is expected to register a compound annual growth rate of 10.5% by 2026, totaling an estimated $91.8 billion. As the necessity to continually utilize machinery to supplement human labor increases, companies invested in this future that can blend experience and technological adaptability are bound to thrive, and Sarcos fits those criteria nicely. While we see an unprecedented number of workers leaving the workplace, a rise of capable machines might alleviate the pressure on industrial companies as they seek to ramp up production in a post-vaccinated world. Sarcos claims its battery-powered devices provide the working capacity of three human workers, which more than accounts for the current rate of employees quitting their jobs.

Sarcos announced a merger early in 2021 with Rotor Acquisition Corp, a special purpose acquisition company (SPAC) founded in 2021. In September, the SPAC deal took effect when Sarcos received a private investment in public equity worth $220 million from various groups, including Palantir (NYSE: PLTR), Schlumberger (NYSE:SLB), and Caterpillar (NYSE: CAT). SPACs have become increasingly famous, as 2021 saw over $160 billion raised from these "blank-check" companies. Initial public offering investors should always be skeptical about companies involved in these sorts of deals, as previous information about the company is not made public. However, the Sarcos Q3 balance sheet reported $240 million in cash and equivalents, which is deemed enough for the commercial release of its Guardian XO industrial exoskeleton and Guardian (XT) industrial robotic avatar system. Sarcos also reported a pre-revenue of $1.1 million in Q3, while its total estimated market value is over $1 billion. While estimates in share appreciation vary, the more moderate consensus is a projected 22.5% increase. A financial analyst for Jeffries, Stephen Volkmann, predicts a possible 141% appreciation in the coming year. However, take that with a grain of salt as commercialization has not yet begun. Although everything indicates success in 2022, specific issues such as the global supply chain crisis could delay production and shipping, as they did in 2021. Some losses were reported in Q3, with a total net loss of $37 million, though this comes after increasing expenses from $8.4 million to $41.6 million in 12 months, leading up to the acquisition. This is to be expected as public sales have not yet begun. Sarcos may also see profits from 2023, as their first models to be commercialized are set for release at the end of 2022.

investor.sarcos.com

Sarcos is seeking to aid the workforce by augmenting human labor with machinery, which will let workers handle up to 200 pounds while safeguarding against occupational hazards. The company intends to facilitate the transition process for many companies interested in their products by charging $25 per hour, or $100,000 per year, through their Robot-as-a-Service (RAAS) model. The return of investment is calculated to be much higher, given the amount of productivity each item can increase, all while mitigating the potential damage of a reduced workforce. An estimated 16 million people stand to benefit from augmentation such as robotic exoskeletons, with Sarcos targeting the $15 billion serviceable obtainable U.S. market. The company is also targeting a minimum of 22,500 units by 2025.

Seeing as the market is set to grow exponentially, Sarcos finds itself well placed in an emerging and crucial need. In January, the company announced that they completed the beta version of the Guardian XT, a dual-armed dexterous teleoperated robot capable of multiple maintenance and logistics needs in otherwise dangerous environments. The successful beta version by the end of 2021 means things are on track for commercialization in 2022. While there may not be much historical data for investors to work on, the sheer backing of the company by blue-chip names should inspire enough confidence in Sarcos, enabling them to navigate the growing market.

Aside from the mechanics of their robots, which provide operators a considerable amount of dexterity and safety, products such as the Guardian XT are also equipped with software that allows for features such as motion capture. Continued investment into the company can be expected over the coming years through its connections and backing with large corporations and the U.S. government. An increase in earnings will almost certainly accompany an increase in revenue.

While the global economy continues to recover from the pandemic, advancing technology has never proved to be more crucial as the sure way to sustain economies and drive markets through tough times. Investors are offered very few opportunities to get in at the beginning of what promises to be a decades-long journey. For Sarcos investors, looking to the robotics company in the long-term might be more advisable, but it would come as no surprise to see substantial returns in investment after a year or two. After all, Sarcos is setting itself up to be a player in the 4th Industrial Revolution.

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Sarcos Technology and Robotics: A Player In The Fourth Industrial Revolution - Seeking Alpha