Sarcos Technology and Robotics Corp. this week announced that it has laid off about a quarter of its 300-person workforce as part of a restructuring effort to help it reduce costs. The company said it expects the move to help save approximately $14.1 million annually. But it added that a onetime charge of $1.5 million will happen in the third quarter of 2023.
Sarcos also announced several other “optimization efforts” to save cash, including moving over all manufacturing happening in Pittsburgh to Salt Lake City, where the company is headquartered.
As part of the restructuring, Chief Operating Officer Jorgen Pedersen is moving to an advisory role at Sarcos. He is the former president and CEO of RE2 Robotics Inc., which Sarcos bought last year for about $100 million.
Pedersen announced his departure on LinkedIn yesterday.
“After spending the past year helping to integrate RE2 Robotics and Sarcos Robotics post-acquisition, I plan on serving as an advisor to the company moving forward,” he wrote. “As with any founder who goes through an acquisition, there comes a time to move on from the day-to-day responsibilities.”
“After 22 years, it is going to be hard not starting my day by walking the halls of the company that I built with some of the most amazing friends and colleagues,” added Pedersen. “Thank you to the dedicated and brilliant people who made my daily work life a joy.”
Earlier this summer, Kiva Allgood stepped down from the roles of Sarcos CEO and president. Laura Peterson, a former independent director at Sarcos, is now serving as interim president and CEO.
Sarcos has been struggling financially. In June, it announced a reverse stock split to increase its price per share to follow the Nasdaq's $1.00 minimum bid price.
Sarcos narrows market focus
Sarcos Technology stated that it will now focus on three key end markets – subsea, aviation, and solar. It previously developed industrial exoskeletons and teleoperated systems and recently announced a collaboration with VideoRay on underwater vehicles.
“We have initiated a more focused business plan, concentrating on solutions that we believe have the greatest alignment with customer demand and speed to market,” said Peterson in a statement. “These solutions consist of our Guardian Sea Class, aviation and solar solutions, as well as advancing our AI software.”
“We are realigning our operations to capitalize on the most promising revenue opportunities and end markets,” she added. “We are also reducing expenses and headcount and consolidating our manufacturing footprint.”
The company said it is also creating a new “Advanced Technologies” software business division to “drive emerging SaaS/AI revenue opportunities.” The division will be led by Denis Garagić, Sarcos' chief technology officer.
“The focus of the Advanced Technologies division will be the company’s AI and machine learning (ML) software platform for generalizable autonomy,” said the company. “The AI and ML platform will be designed to be usable across a variety of autonomous systems, including factory robots and drones. Advanced Technologies will have a market-led approach through collaboration with industry partners to accelerate the adoption of its innovative AI platform and related technologies.”
Sarcos noted that all these changes “will help reduce monthly average cash usage from approximately $6.5 million in the second quarter of 2023 to $3.0 million in the first quarter of 2024.”
The company said it will share further details about the changes in the coming weeks.
CFO gives deeper insight into restructuring
Drew Hamer, Sarcos' chief financial officer, responded to the following questions from Robotics 24/7:
Will any of the former RE2's staff be moving to Salt Lake City?
Hamer: The majority of RE2’s staff will continue their roles in Pittsburgh. A few are under consideration for a mutually agreed-to transfer.
Since Sarcos is focusing on marine, aviation and solar, what will happen with Sarcos' exoskeleton and teleoperation development?
Hamer: Sarcos has refined our sales strategy to focus on products that have the most potential for near-term revenue growth and strategic opportunities that show the greatest market traction and meet an acute customer need.
We are concentrating on solutions that we believe have the greatest alignment with customer demand and speed to market.
These solutions consist of our Guardian Sea Class, aviation and solar solutions, as well as advancing our AI software. The development of our other solutions will be de-emphasized for the time being.
Will you still be working with with Jabil on manufacturing?
Hamer: Yes, we will. The company’s relationship with Jabil has not changed.
Does the current economic environment merely delay your development plans, or are you seeing demand for autonomous systems shift?
Hamer: We have primarily found that our customers are wanting bespoke solutions versus off-the-shelf robots.
Our more focused business plan is concentrating on solutions that we believe have the greatest alignment with customer demand and speed to market.
Can you describe the AI and machine learning platform that Sarcos' new division is working on for “generalizable autonomy?” What industries are you partnering with?
Hamer: The charter for the new Advanced Technology group is to progress the development and productization of Sarcos' AI and ML software platform for generalizable autonomy.
The AI and ML software platform will focus on enabling robots to learn from experience using a success-based learning approach. We anticipate the demand for these products from both government and commercial organizations will be large in the coming years.
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