Palladyne AI Corp.

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 speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mariah Shilton. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to the Sarcos Technology and Robotics Corporation First Quarter 2023 Earnings Call. Joining us on the call this afternoon are Sarcos President and Chief Executive Officer, Teva Allgood, and Chief Financial Officer, Drew Hamer. Kayla will start the call with a discussion of business highlights from the first quarter and recent events. And Drew will then talk in more detail about the financial results before management takes questions from analysts. Before we begin, we must state that today's call will contain four looking statements, including statements concerning future commercial production and availability of our products, product features and capabilities, target markets and market trends, size and expectations, customer demands, and future financial results. condition, and cash flows, including revenues, costs, and liquidity. In addition, any statements about future performance related to our acquisition of RE2, including our expectations regarding the benefits to be achieved, the financial performance of the combined company, integration plans, and other statements regarding the combination of the two companies, are forward-looking statements. These statements represent management's beliefs and expectations as to future events as of today. but there are many risks and uncertainties that could cause actual results to differ from what we have projected. Among those risks and uncertainties are those described in our report on Form 10-Q, filed today with the SEC, and those mentioned in today's earnings press release. We encourage you to review the risks and uncertainties described in this press release and in our filings with the SEC for further information regarding these actual and potential risks and uncertainties. We also encourage you to review the special notes regarding forward-looking statements, including in our earnings release and 10-2 for the first quarter of 2023, filed with the SEC this afternoon, and which will be posted in the investor section of our website at clearcoast.com and on the SEC's website. In addition, we will be discussing certain non-GAAP financial measures on our call today. Throughout this call, all financial measures will be GAAP, unless otherwise noted. The reconciliation of any non-GAAP measures to the most directly comparable GAAP measures, as well as the description, limitations, and rationale to such measures, are included in the earnings release filed with the SEC this afternoon, and which is available on our website and on the SEC's website. A recording of this call will also be available on our website until June 9, 2023. The information that we're giving on this call is as of today's date, and we undertake no obligation to update the information subsequently. At this point, I'd like to turn the call over to Kiva Allgood, President and CEO of Serco. Kiva?

Thank you, Mariah. Good afternoon and welcome to everyone joining us on the call today. As you saw in our press release, we are gaining revenue momentum from our product development contracts as we push toward initial commercial production sales in the coming quarters. Now that some of the gardening and family of products are available for sale, we have been able to get products working out in the real world and we expect commercial product sales to ramp up in the second half of the year and grow from there. We're excited about our recent manufacturing agreement with Jabil, and as demand for the Guardian family of products grows, this relationship will allow us to grow beyond our initial production capacity of 300 to 500 units per year. In March, we attended ConExpo, the largest construction equipment trade show in North America. There was tremendous interest and traction at our booth as we began engagement with more than 70 companies who are speaking with us about how our robotic solutions could help improve their productivity and safety. And they could see firsthand how impactful our Guardian product can be as we perform demos of the XM and XT doing semi-autonomous and tele-operated work at height, such as laser ablation, grinding, and cutting, all tasks required in surface preparation, shipbuilding, and construction, which we believe represents a large market opportunity for Sarkos. Over the week-long event, we demonstrated how our solutions, which include hardware, software, and components, improve productivity while keeping workers safe from dangerous working conditions, seeing and believing when it comes to Sarkis solutions. And even in the rain, the team executed and performed well. Now that our products have come to life, we have been actively on the road at industry shows and events and are focused vertical. In April, Sarkis took part in the Aviation and Robotics Summit a three-day invitation-only series of workshops, site tours, networking that brought together aviation and robotics industry professionals and experts from around the world. The goal of the summit was to solve aviation business and operational challenges with robotic solutions and advance the industry's focus on improving the travel experience. Jorgen Pedersen, our Chief Operating Officer, participated in a panel with Delta Airlines and the CEO of Pittsburgh International Airport to discuss how robotics are critical for the growth of the aviation industry. And we were thrilled to host more than 60 summit attendees at our Pittsburgh headquarters where we conducted demonstrations of our robotic systems and solutions and spoke about the many aviation-specific solutions we have to offer. All attendees were able to see our baggage handling solution as well as the Guardian XT inspecting an airplane fuselage, and we received very positive feedback from the aviation aviation industry leaders. We had another opportunity to demonstrate our robotic solutions last week in Houston at the Offshore Technology Conference and Exhibition, where energy professionals exchanged ideas on offshore resources and environmental matters. We formally announced our partnership with VideoRay at the OTC show, and we demonstrated how our Guardian C-class can be retrofitted onto their underwater remote-operated vehicle. We bring human-like dexterity to VideoRay's marketing inspection class ROV by adding arms and hands. Now it can do complex subsea jobs such as ship maintenance and salvage. It was a great opportunity to promote the Guardian Sea class as well as our important new agreement with VideoRay. The underwater robotics market is growing 13% a year and is expected to be 2.4 billion serviceable, adjustable market globally in 2024. In addition to industry events, we have been doing on-site customer testing to ensure our system performs as intended, are durable, and that our software solutions meet the customer's specific needs, putting us at a critical step closer to product sales. And as I mentioned on our last call, we completed the final validation in our product development contract for our robotic solar field construction solution to help an industry facing labor shortages increase productivity while reducing installation costs. We're also on track to achieve ISO 9001 compliance by the end of the year, which will put us on our way to achieving certification in early 2024. We are proactively applying quality standards throughout the business to ensure that we meet the reliability and quality requirements our customers demand. These events I've talked about today are important steps toward commercialization as we introduce StarQuest Robotics solutions to potential customers and generate sales momentum. The excitement that comes from witnessing in-person how revolutionary our technologies are can't be duplicated with a sales brochure or even a video. The gardening family of products are bringing advanced technologies such as machine learning, artificial intelligence, physics-based modeling, and simulation to unstructured spaces. This is groundbreaking work and sets a solid foundation for Sarkis to leverage RIP as we launch into industry-specific solutions like the ones we are developing for solar panel installation and baggage handling. These foundational technologies are available now and will enable Sarkos to bring new solutions to market with greater speed at a lower development cost. With this strategy and the market momentum we created at ConExpo, the Aviation and Robotics Summit, and the Offshore Technology Conference, we're confident in our ability to achieve our 23 to 25 million revenue target this year as we commercialize our existing lineup gain sales momentum, and develop new technologies for the future. Our participation in these events reinforces our commitment to the opportunities we continue to pursue in the aerospace, construction, and underwater industries, which collectively represent a global TAM opportunity of approximately 185 billion in 2025. After only recently announcing the commercial availability of product, we are proactively increasing sales while working to reduce operating expenses by refining our business model and reducing third-party R&D costs, all with a goal to be on pace to be cash flow positive in 2025 when we exit 2024. And now I'll turn it over to Drew to report on the financials.