Palladyne AI Corp. Q4 FY2021 earnings call

• Announcement of the planned acquisition of RE2, a leader in teleoperated robotic systems with a focus on subsea and medical applications, which expands Sarcos' addressable market. • Commercialization efforts: Completed assembly of the first Guardian XT Beta unit and successfully demonstrated it to a government customer; made progress on the Guardian XO with the deployment of an autonomous operation algorithm; adjusted the XO Beta development due to supply chain challenges, with final assembly of the XO Beta now expected later in 2022 but still on track for initial production of commercial units by the end of 2021. • Moved into a new headquarters in the Granary District of Salt Lake City, featuring state-of-the-art facilities. • Continues to face challenges in hiring technical talent due to high demand for such candidates.

In 2021, Sarcos Technology and Robotics Corporation reported full-year revenue of $5.1 million, a decrease from $8.8 million in 2020. Quarterly, fourth-quarter revenue was $1 million, down from $3.4 million in the fourth quarter of 2020. Research and development services revenue dropped from $6.8 million in 2020 to $3.6 million in 2021. Product sales (such as Guardian S, Guardian HLS) for the full year 2021 were $1.5 million, a decline from $2.0 million in 2020.

• Anticipates operating expenses to be higher year-over-year in 2022. • Estimates cash burn to be approximately $5.5 million per month in 2022 for operations and capital expenditures, plus around $1 million per month for tax-related stock purchases. • The acquisition of RE2 is expected to bring revenue and cost synergies, though the exact impact is difficult to predict at present. • Remains on track to commence initial production of the Guardian XO and XT commercial units by the end of 2021.

• Risks related to the planned acquisition of RE2, including uncertainties in realizing revenue and cost synergies. • Supply chain challenges that impact product development. • Intense competition for technical talent. • Unpredictable volatility in earnings due to warrant accounting.

Q: Can you help understand the commercialization timeline for XO and XT?

A: Both are on track to be delivered by the end of 2021, with the team aiming to produce up to 500 units.

Q: Any details on cash burn regarding the RE2 acquisition?

A: Still evaluating the full impact, but initially expects the transaction to be neutral to the bottom line.

Q: Status of customer trials and manufacturing plans?

A: The pipeline for trials is growing, and currently evaluating manufacturing options with a mix of products including HLS and GS units.

Q: RE2 product applications and sales run rate?

A: RE2 products complement Sarcos' portfolio for different tasks, but sales run rate information is not available yet as the transaction hasn't closed.